How would you catagorize Crypto/Stocks?

Hello folks, a YNAB silent veteran here but I've actually hit something that stumps me on here. 

Over lockdown I have started to invest in Crypto and Dividend stocks as a way to diversify my portfolio. This is all and well and I have a Catagory for each in my budget and track it as a spend. However, This money isn't really gone, yes. It can fluctuate wildly at times so it would be hard to keep track of if it was kept in an account. but it does throw out my budget by quite a few digits. Does anyone else have this issue and how do they manage it? 

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    • nolesrule
    • Stealing From the Future fix is an improvement but is incomplete....
    • nolesrule
    • 1 mth ago
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    Are you asking about having these taxable investing accounts in your budget and how to manage them? I have developed a system for myself that keeps the budget money safe from market fluctuations, but it involves having a reserve of money your budget doesn't need that is invested. Essentially, you need a category that hold your profit and loss separate from money in budget categories. Every month you adjust the account balance and put the gains,losses in that category. The category balance should be at least 50% of the amount of the investment value that is held in volatile assets (stocks, stock funds, ETFs, HY bonds, crypto) so that in the event of a market crash your budget is not damaged.

    On a side note, dividend stocks don't diversify your portfolio, assuming the starting point is total market or even an S&P500 index. They tilt it. Dividends also are not a good choice in a taxable portfolio, because they throw off taxable income that is outside your control. The preference should be for gains to come from capital appreciation. That way, if you do actually need to draw money it comes from selling which will contain a mix of basis (not taxable) and capital gains (taxable), as opposed to dividends which are 100% taxable.
     

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      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 1 mth ago
      • Reported - view

      And if the accounts are tracking accounts, and not part of the budget, just use a category to send money to the accounts. You'll need to budget for that though, because it's money leaving your budget just like spending is. Then in the tracking account, just update the value monthly.

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  • I do taxable investing. I have a category called Investments that I budget to every month and I have a tracking account called Investments. In my Checking Account I have monthly transfers to the Investment Account. Because it is on budget to tracking, the transfer requires a category which is the Investment category.

    After the market closes on the last day of the month, I go into the register of the Investment Account, make sure the transfer from the Checking Account is marked as cleared, and then do a reconciliation adjustment which captures all the gains and losses of the month. Tracking the changes from say the 14th to the 15th of the month is of no interest to me.

    Please note that I do 100% manual entry in my budget.

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  • I'd encourage you to set those up as tracking accounts, rather than budget accounts. You'll be able to look at the balances, know that money is yours, but it won't affect your budget.

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  • I have both crypto currencies and stocks in my budget and in tracking accounts so I know either way can work. But if you do have them in your budget, you have to be able to handle the wild fluctuations and like Nolesrule said, have a category with plenty of wiggle room that can handle them. Like Marisa said, the easiest way is to keep them as tracking accounts and then just update the balances once a month or so.

    I only recommend having them in your budget and categorizing them for experts that know what they're doing. At the very least, maybe start with them all in tracking accounts. You can always move them into your budget at a later date if/when you feel comfortable with that.

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