How do you track and multiple goals in an off-budget brokerage account?

I want to save towards a home down payment(10 years), car downpayment(5 years), and an additional amount to let it grow over time for who knows what else(?).  I put aside $1000 a month for the home, $100 for the car, and$50 for an additional savings goal - each one has a category inside my budget. $1150 is then sent to my brokerage account where it is invested.

1) If I am contributing money to each category each month, how do I show the transaction once that money gets moved from a budget account to an off-budget account?

2) How do you show the transaction when you decide to bring the money (basis) and the gain (income) back into your budgeted account to utilize?

3) After an x amount of time has gone by, how am I able to track what each goal has amounted to vs. what I put in?

 

I hope this makes sense - thanks in advance.

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  • 1) It would be a transfer to your off-budget brokerage account and the budgeted funds would be reduced to compensate.

    2) It would be a transfer from your off-budget account into your budget to be redistributed among your categories.

    3) You are correct that it is no longer categorized after it leaves your budget. You could just do the math to bring it back in in the same ratios. Or if you change your mind and you want to distribute it differently, you can.

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  • It would be much simpler to reason using percentages of the amount of the brokerage account. For example, I use my brokerage account to also save money to give to our kids for when they'll be independent. But I can't say the monthly amount I'll send to the investments will be constant for 20 years. So instead I decided the kids would each get 5% of what's in the account. So it's easy to keep track how much I have saved for all.

    In your case, considering the numbers you give, you could say: 87% is for house downpayment, 10% is for car replacement and 3% for other. Then it's very simple to see how much you have saved for each goal. And it simplifies the budgeting as it can all be budgeted in one category (unless it motivates you to keep it separate).

    And you are free to change those percentages any time. For example, if you increase the amount you send to investments, simply change the percentages to attribute more to one goal vs the others. Or if you think the other category grows too quickly, simply reduce the percentage.

    You would have to keep track of the percentages somewhere. It could be a note in an investment category in YNAB (if you decide to lump your 3 categories into 1 as said above). Or it could be a spreadsheet so you can quickly see the amount saved towards each goal. Or a note in the tracking account if that's possible in YNAB (haven't checked).

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  • Investing is recommended for a 15-20 year horizon. If you invest money that you want to spend in 10 years or less, there's a good chance it won't work out. This can be a good choice if you're okay with that risk. But you wouldn't want to delay having kids until the stock market recovers 😄

    YNAB obviously can't help with off-budget accounts. Why not keep a spreadsheet where you track what you paid in for which purpose?

    YNAB works great for budgeting monthly and spending daily. For purchases with a 5 or 10 year horizon a spreadsheet is a fine addition.

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 mth ago
      • Reported - view

      Wessel That's definitely a personal choice and depends on one's risk tolerance. I personally would invest any funds needed greater than 5 years. I think 15 years minimum is WAY too conservative and I don't think that's common advice among investment professionals.

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      • Wessel
      • wessel
      • 1 mth ago
      • Reported - view

      Superbone The advice is easy to verify. Look at the S&P 500 for the past 30 years. It has 15 year intervals where it barely breaks even.

      So an educated advisor paid to act in your interest should share the 15-20 year advice. A university researcher would agree. A salesperson for a brokerage would not. Check out Where Are the Customers' Yachts? for a fun read 🤣

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 mth ago
      • Reported - view

      Wessel Thanks for the book recommendation. Sounds like it’s been around a long time and is well regarded. I’m surprised I hadn’t heard of it. I’ll check it out.

      I just think if you don’t invest funds that will be used within 5 to 15 years, you’re going to get killed by inflation. Looks like the reviewers agree with the Bogle method of low cost index funds which is what I employ. The fiduciaries I’ve read and heard don’t share the 15-20 year advice. More like 10 years max. Of course, the majority of funds I sell will most likely be in your long-term  category or greater if you assume FIFO.

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  • Superbone said:
    I just think if you don’t invest funds that will be used within 5 to 15 years, you’re going to get killed by inflation.

    Yeah, if there is a lot of inflation, that changes the equation. But there is almost no inflation at the moment. And you can earn some interest in a savings account. If inflation is 1% higher than interest, it would take 12 years for your money to drop 10% in value. That's not too bad. And at the moment the difference between inflation and interest is more like 0%.

    On the housing market you are competing with other people. When the economy tanks, lots of people will earn less, lose money on investments, and be in a hurry to sell their house. That puts people with a savings account in good position. Liquidity allows you to buy when it's a good time to buy, while investing does the opposite.

    The advice not to invest money you need in the coming 15 years is pretty sound.

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  • Personally I would not invest any budget funds until I have a taxable account that's at least as large as my Income Replacement Fund but is devoted to nothing in the budget. I have no interest in putting my budget at risk.

    That said...

    I'll be the contrarian and tell you to put your Investment account in the budget.

    Rather than investing specific categories, I have included the money in my budget as part of the Fixed Income portion of my portfolio. I then calculated an amount of money to leave in cash equal to 6.5 months of total take home pay + the sum of a few categories I need left in cash. This tells me how much money I can put in the investment account. It gets invested in broad market index funds, and I hold the rest of the fixed income in tax advantaged accounts. If I need to rebalance because of too much stock, I do it there.

    Separately, I have a portion of my monthly income that is devoted purely to investing, which gets budgeted to a Taxable account category. I also use this category for the monthly adjustment for growth/losses. So the amount of invested funds earmarked for the budget is account balance - category balance. You want to make sure that at least 30% of the money you are investing falls into this category.

    And as long as the Investing category doesn't go negative, then the money I'm saving for things in my budget has not taken a hit. Keep in mind I do not rely on the growth as part of the plan, so I save in my budget categories as if there will be no growth. This is more conservative and will better allow me to still hit my goals. The amount of money I have devoted purely to the investing category is over 2.5 times my income replacement fund, and is over 80% of the account.

    Like 1
  • Wessel said:
    YNAB obviously can't help with off-budget accounts.

    It can if you make a separate budget explicitly for those funds.

    Like 1
  • Here is what worked for me:

    1. Firstly, I stopped thinking about the accounts. Period.
    2. I created a category group called "Saving up For..."
    3. Created categories, "Downpayment for Home", "College Fund", "Buy a Car", etc.
    4. For each of the categories, create goals.
    5. When I import my bank statement and see transfers to an "off-budget" account, I simply set the payee to "Savings" and split the categories to the above.
    6. When I decide to "bring money back", I simple categorize the inbound transfer as "Inflow: To be Budgeted" like any other cash coming into my accounts.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
      • 1
      • Reported - view

      Festive Healer How does that tell you how much you have saved for a particular thing?

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    • nolesrule , the available balance column tells me and selecting the category also tells me how much I’ve progressed towards my goal

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
      • 1
      • Reported - view

      Festive Healer I'm confused, because your step 5 says you are transfering the money out of the budget categorized to those categories. So the available goes down with the transfer.

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