How to categorize transfers to brokerage portfolios in and out?

Hello fellow YNABers.  I'm a couple months in and feeling good with YNAB.  I'm struggling a bit conceptually with how to handle transfers to investment accounts.  This is largely because transfers to TRACKING accounts require a category as opposed to transfers between checking/savings.

I see one of two methods here:

-METHOD ONE:  Use transfers IN and OUT of brokerage directly against "to be budgeted" without a specific category.  This way it isn't being "spent" against a budget per se.  Maybe this appears to be a loss of income through reporting though?

-METHOD TWO:  Use budget categories (like "for investments) for transfers IN and OUT of brokerages - though the trouble is that the money would stick in a budget category instead of go back to "to be budgeted" as cash without a purpose.  I suppose you could move money out of the category and back into "to be budgeted" to be reallocated - but if this is required why not go with the first method?

Can you share with me how you handle budgeting these transfers in your personal experience?

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  • Use a category, not To Be Budgeted.

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  • Hi @nolesrule - So for example you would:
    1-add money to "investments" category
    2-make transfer to investment brokerage as a purchase - not a transfer (using that category for the expense)
    3-When you withdraw money (whether it's profit or initial capital) you add that incoming money back into the investment category?

    Do you then move money out of the category if you want to reallocate?  Just wondering how this will all look in reports.

      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 4 mths ago
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      Aquamarine Cleric Yes, use the category for both inflows and outflows. Then reallocate as needed.

      I do not rely on YNAB reporting for my taxes. There are 1099s for that (though I stay proactive and project my taxes throughout the year in a spreadsheet).

      That's how I used to do it. My brokerage account is now part of my budget, but I don't recommend it.

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  • Aquamarine Cleric said:
    a purchase - not a transfer (using that category for the expense)

    If you have a tracking account for your investments, it can be a transfer - transfers to/from on budget account to tracking account require a category since they represent money leaving/entering the budget. 

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