How do you plan your invested money for future budgets?

My situation: I'm keeping money for 3 thing in a distant future. I invest all that money. How to keep track of the amount I have for each of these 3 things while using tracking accounts to know that I don't have that money available at the moment?

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  • You can track it outside of YNAB. Investment accounts should not be on budget due to volatility.

    Like 1
  • Hi Igorzovisk !

    If you add those investment accounts in YNAB as Tracking accounts, you'll be able to keep track of their balances, but those balances won't be included in your budget. We suggest Tracking accounts for Investment accounts because this allows you to keep an eye on those balances, without budgeting those funds.

    Here are the steps to set up that Tracking account:

     1. Select to Add Account
     2. You can skip the Direct Import screen, and select Investment Account (under Tracking) as the Account Type.
     3. Afterwards, create an Investments category (this will be used when you transfer funds from your Checking or Savings to the Investment account).

    Give that a try and let me know if you still have questions!

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  • Hey Igorzovisk I had a similar issue. I understand the purpose of budgeting just for checking/savings/credit cards but I keep my long-term goals in an investment account. Volatile or not, I wanted to be able to track the purpose of these funds within YNAB. I do the following to make it work. It's not perfect, and requires some maintenance, but I'm happy with the results.

    1) Create a grouping titled "Goals: Future". Under this group I have a category called "Offset: Investment Balance." I also have categories for each of the items I am saving within my investment accounts for.

    2) After categorizing all of my regular expenses and updating all of the tracking accounts, I add up my investment account totals and enter the balance as a negative amount in the "Offset:Investment Balance" category. If the "Goals:Future" grouping does not net to $0 then I update the items I'm saving for accordingly.

    4) Next month, the totals at the top will show that there is an overspent amount from the prior month. This overspent amount should match your investment account balance. Enter your investment account balance into the "Offset: Investment Balance" category as a negative amount and the "to be budgeted" total at the top should now be accurate.

    P.S. I only started doing this in YNAB once my Age of Money increased to 60+ and I felt stable. I think with a lower Age of Money, it's better to work with just your checking, savings, & credit card totals so you are clear that you are only spending what you have. With a longer Age of Money, my month-to-month spending is a little more flexible.

    I don't know if there are any long term consequences in YNAB for using this method, but it is portable and easy for me to see how I'm doing in the long term. I would love if YNAB would add a module that allows the allocation of the tracking accounts but until then, this is what I plan to do.

    Like 4
      • Blue Orca
      • Blue_Orca.8
      • 2 mths ago
      • Reported - view

      Salmon Mainframe Thank you for this! Been looking for this answer for a while...

      Like
      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • 3
      • Reported - view

      Blue Orca If you're bound and determined to do this, a better approach is to just put the investment accounts on-budget with a category to absorb losses/gains when periodically reconciled to the current market value. Transfer as much to investments as you feel comfortable risking -- shifting funds between budget accounts doesn't impact the budget.

      Edit: the main question you'll have to address is how much to keep in the Unrealized Losses & Gains category.

      Like 3
      • Blue Orca
      • Blue_Orca.8
      • 2 mths ago
      • 1
      • Reported - view

      dakinemaui Great approach. Appreciate this! We'll see how determined I end up being...

      Like 1
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 mths ago
      • 1
      • Reported - view

      Blue Orca my personal recommendation is that no less than 50% of the money in the investment account that is invested in equities be held in the Investments category.

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
      • Reported - view

      I have most of my taxable investments on budget. My largest category balance by far is my Freedom Fund. This category can absorb any losses. The goal though is to continue to grow it.

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      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 mths ago
      • 2
      • Reported - view

      Superbone You call it "Freedom Fund". I call it "Taxable Investing". Guess I'm not creative. It is by far the largest category in the budget at 42% of the sum of my budget accounts.

      Given that we just gifted 123 shares of VTSAX to our DAF (this is one of the now rare itemization years for us..... SALT cap grumble grumble), but took the money from our charitable giving category, the amount of funds in the investment account that is not earmarked for budgeted items is now down to 19%.

      Like 2
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
      • Reported - view

      nolesrule Alright, you prompted me to calculate my percentage and my FF is 40% of all budgeted funds. But I do have some other very large categories like Car Replacement and a fully funded CD Project, not to mention, my fully funded EF which is really an IR, which is no longer really necessary.

      ETA: And that is very generous of you to donate over 20% of all budgeted funds!

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      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 mths ago
      • 1
      • Reported - view

      Superbone Yeah, I mean our cash holdings are just 6.5 months take home pay plus a couple other categories (including fully funded next car for Mrs. nolesrule, since she's driving a 2006), and it still seems like a lot. The number does not include the Treasury Direct account, but does include the cash balance in the HSA. (Yay YNAB API making it easy to pull the numbers into Google Sheets.)

      The DAF contribution was accumulated since January 2018, and we had been using our 2017 DAF contribution to fund most charitable donations over the past 3 years.

      Like 1
  • This is kinda here nor there, but I've had one investment account on-budget for a year and a half now.  When my Ally Savings account is built up to a certain limit, I shift funds to an on-budget Schwab Intelligent portfolio of their most conservative option.  It generates monthly income.  I send that income to next month.  I never adjust the balance of the account other than the dividends it accrues.

    This was working well for almost a year, as the actual balance in the account was always comfortably higher than the YNAB amount.  And then late March '20... I never thought I'd see it, but the actual value of the account went considerably below the balance in YNAB.  All gains, including earned income, vanished and then some.

    I knew this was a risk from the start, and I did not want to pretend like those losses didn't exist, so I did balance adjustments each month and made up the difference from my never touched "Emergency Fund."  As the balance crept back up each month, I replaced the money in the EF until it was back to what it was, and returned the YNAB balance to the principal plus dividend income earned.  Thankfully, it only took a few months.

    I'm not sure if there's a lesson here, but I took the risk, unfortunately experienced the exact scenario that would have been the 10% chance in a monte carlo simulation, and faced reality and rolled with those punches.  If it had continued to drop I would have had to put a "stop loss" on the Income Replacement/EF category and started taking from some lower priorities.  *Whew* 🤞 

    Like 3
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 mths ago
      • 1
      • Reported - view

      Annieland Yeah, that's the risk, and it's why I recommend people have a cushion in their budget to absorb losses. In a typical downturn equities can drop about 50%. March was only about 33%. But sometimes they can drop as much as 80%. And there's just no knowing how long the actual recovery might take.

      These numbers are why I recommend the initial cushion category be at least 50%. Additionally, I don't use the gains to fund my budget, but instead accelerate the gains even more by adding them to the "cushion" category.

      My investment account contains only equity index mutual funds and ETF for tax efficiency. For the lower risk allocation, we are purchasing I Bonds, which can be held up to 30 years.... and the taxes are not due until redeemed, at which time we expect to be in a lower tax bracket. However, the account holding I bonds (at Treasury Direct) is just treated like a regular savings account as far as the budget is concerned (beyond the 1 year illiquidity on a purchase).

      Like 1
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 2 mths ago
      • Reported - view

      nolesrule Ok, instead of wrapping gifts I dug into my percentages too, as I'd never thought of it this way.  This was the first time I ventured into putting a volatile account in YNAB at all (I have all other investments in another program).  This particular joint account is 24% equities, 22.5% cash, and the rest fixed income.  As of the second half of this year I've been able to sweep unneeded funds to a Buffer/Cushion category that I only decided on a purpose for a week ago.  It is actually almost exactly the dollar amount of equities in the investment portfolio.

      Now, of course the money in that buffer category is conceivably "located" in the schwab account as well.  But it would still qualify as a cushion to offset potential losses for budget purposes, right?  Last March when everything went to hell, I lost 2.9% of the principal amount in YNAB.  Right now, the actual account balance with unrealized gains is 6.3% higher than the principal balance in YNAB.  A loss of 5.9% or more would put me back in the YNAB balance hole where I'd have to offset from the buffer category (and leave Income Replacement alone this time).

      I have 3 other taxable accounts in my name only, one at E*Trade from my college years, one at Schwab, and one at Chase.  Oh wait, I have 4.  Another managed account at Chase.  It has never occurred to me to put these anywhere near YNAB, and I can't say I have any purpose for those funds, other than to not spend them on crap I don't need.  

      No clue if my thinking is sound on any of this, as I fly by the seat of my pants pretty much, and I really appreciate all your advice to us!

      Like
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 mths ago
      • 1
      • Reported - view

      Annieland It took a lot of time for me to settle on a plan that I felt was a balance between not holding too much cash and putting my budget categories at any sort of risk. In fact, I only added my investment account into the budget this past January, having started it back in 2015. So at that time, the entire balance of the account had no actual purpose. Actually, that's not entirely accurate, because I was also transferring money for my next car into the account, since my car is only 5 years old, so when I brought the investment account on budget I put the money that had been transferred out back in the car category.

      It took me awhile to settle on exactly how much to exclude from investing. I can be specific though, in that in addition to the 6.5 months of takehome pay and Mrs. nolesrule's next car (and we already have a category for the car after that being funded because this one is fully funded), the other excluded categories are for a child's lifecycle event coming up in under 2 years, money reserved for tax payments (although it turns out we'll be getting a hefty refund this year due to some temporary paycuts, tax loss harvesting and deciding to donate enough this year to itemize) and money for January's backdoor Roth IRA contributions.

      Although even with all that considered I often still feel like I'm holding too much cash and may cut back from 6.5 months take home to 6 months and see how I feel about that, especially since the I Bonds are not considered part of the cash, but is in an amount that is close to half our Income Replacement category and will likely surpass it in about 2 years.

      Like 1
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 2 mths ago
      • Reported - view

      nolesrule Ok, I put my income portfolio on budget in July '19 so we're similar there.  It's probably a "good" thing that it suffered that hit this year so I could realize the risk and think about future contingency plans.  

      My husband just got a new car which I plan to pay off with cash flow in the next 3 years.  Mine is 5.5 yrs old, but boy, I'd sure love a new one.  I have nothing for that in the budget though.  I started my own backdoor Roth barely a month ago, and will fund it again in Jan. I think.  But I didn't have that money come out of YNAB.  I have to take required minimum distributions from an IRA which I plan to use towards the Roth, but I probably shouldn't take them in January... So who knows? It's tough stuff, and comforting to know it even takes you awhile to come up with these kinds of plans.  

      Make sure you tell us when you pull the trigger on Mrs. Nolesrule's new car :).  

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      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 mths ago
      • 2
      • Reported - view

      Annieland 

      Annieland said:
      Make sure you tell us when you pull the trigger on Mrs. Nolesrule's new car :).

       She has a 2006 CR-V. The old model with the tire on the back gate, before it got turned into a glorified mom-mobile. She loves the car, so she's going to keep it as long as she can.

      As for the budget, we've got $30k for the next one just sitting there, so when it happens she could go cheaper for an HR-V (like I have) or possibly get a newer CR-V or something similar from any one of the reliable automakers.

      For my replacement and her next next replacement, we just fund the categories at $300/month each, which after 10 years is $36,000 each ($11k more than I got my most recent car for). My car is 5 years old, so I'm already half-way there. The longer we go past 10 years, the more we have to spend on a car (or not spend if we maintain our target models).

      We actually saved for my 2016 HR-V rather quickly because we got it less than 2 years after starting YNAB and I was driving a 2001 Civic. But walking into the dealership and writing a check for the new car was an awesome feeling.

      Like 2
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 2 mths ago
      • 2
      • Reported - view

      nolesrule Honda family here too :). I had a 2007 CR-V and loved it, but traded it for an Odyssey when the family got too big.  Then I eventually couldn’t stand the whole minivan thing after a while, and got one of the first 2016 Pilots off the assembly line in July 2015. I really do love it, and it still feels like a new car.   I can’t complain.

      My husband on the other hand, likes the Korean cars. I orchestrated a Kia Stinger purchase for him over the summer by leasing it with a $11k rebate on top of negotiated discount, immediately transferred the balance to a very low interest credit union loan, of which I set a payoff goal in YNAB. I don’t always do car loans, but when I do it’s always a 3 year payoff plan, max.   A Suze Orman rule I follow. 

      I just really want something fancy one day...  But I restrain myself.  No December to Remember here yet! 🤣🤣

      Like 2
    • Annieland Wait til tomorrow - you never know - your husband may have bought you a Lexus without checking with you first!

      Like 4
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 2 mths ago
      • 1
      • Reported - view

      Periwinkle Flute 😂😂 Well, I did get something Japanese!  Fancy Japanese porcelain bowls :). So it’s all good!

      Like 1
  • I put the dividend deposits into my budget simply because I like to feel like I'm "earning" something.  But it is such a small amount that it is conceivably being swept into that buffer category anyway.

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