How Eric Dunn, Quicken CEO, Uses Quicken for Investing
I use Quicken for Windows on a daily basis, and a big part of that is making sure I am on top of my investments. In this blog post, I am sharing how I personally use Quicken to track investments.
First some background: I am a long-time Quicken user, with transactions going back to 1986.
In addition to tracking my bank accounts, bills, credit cards and real estate in Quicken, I make good use of the investment-tracking features. I have investments in four main categories:
- Publicly-Traded Stocks
- Municipal Bonds
- Private Company Stocks
- Limited Partner Positions in Venture and other Investment Funds
Generally speaking, my investment approach has been “do-it-yourself”. Although I have many friends and colleagues who have wonderful professional investment advisors, I do not personally use one. In addition, over 90% of my equity holding are held directly, rather than through mutual funds.
My publicly traded stocks are in accounts at two different brokerage firms, and I update them daily as part of Quicken’s One Step Update feature. I then usually also go to Quicken's portfolio view after the end of the trading day (1PM in California) to update quotes and see what the gains and losses for the day were. Unlike with my bank accounts, I have Quicken set to automatically download investment transactions without the "compare to register" step, because the majority of the investment transactions are dividends which originate with the broker. However, I will typically enter a Bought or Sold transaction, or a funds transfer, manually and then be on the lookout to make sure it matches correctly to the downloads (which it typically does).
I have two municipal bond portfolios, one where I own the individual bonds, and another at a different broker where I am an investor in a low-fee municipal bond fund. In the account where I own individual bonds, I have chosen not to track the bonds themselves, which come and go as they mature or are called. Instead, I treat the account as if the entire value was in cash and update the value at the end of each month with a MiscInc transaction if the value went up or a MiscExp if it declined. When income from this account is transferred to my bank, I use an IntIncX transaction. I enter a security ("Muni Bonds") for all the MiscInc, MiscExp and IntIncX transactions so that the investment income will be attributed to that security in investment reports. For the account which holds the municipal bond mutual fund, the income is paid monthly. Since this broker calls the income “dividends”, I use a DivX transactive (with the name of the fund as security), to include the monthly income.
As an “angel investor” in technology startups, I also have a portfolio of private company stocks, which I maintain in a Quicken investment account called “Private Cos.” When I make an investment in a company, I create a new security of Type “Private Company” (I created a custom Security Type for that) with the name of the company and the security – “XYZ Company PFD A,” for example, and enter a BoughtX transaction. Over time, I update the values of these holdings occasionally – perhaps when a company has a financing – using the Price History. If a company is acquired, I use a SoldX Transaction to record the sale.
The last category of investments I track are limited partnership interests in Venture and other funds. With this type of investment, a limited partner (like me) makes a specific dollar commitment; that amount of money is “called” over a period of years. I handle these investments by creating a Security in Quicken of custom Security Type “Venture Funds”. When I pay into the fund with a capital call I enter a BoughtX transaction into Quicken with a fixed price of $1.00 per share, so the number of shares is my cost basis. Over time, as the fund changes (increases, I hope!) in value, I use Quicken’s Price History to record the current value: for example, if the value of my LP interest in a venture fund has increased 43%, I would enter a price of $1.43 in the Price History on the appropriate date.
These steps allow me to have an up-to-date view of the value of all my investments in Quicken on any given day, contributing to my ability to accurately track my complete net worth.
There are two other uses I often make of my Quicken investment data: tax preparation and evaluating investment performance.
I do my own tax returns (with TurboTax) and much of the information I need on investment income comes on the 1099s provided by investment firms. However, when I have income from the sale of stock that I either purchased as a private company stock or received as a distribution from a venture fund, the definitive source of cost basis information is my record in Quicken. I also use Quicken’s Capital Gains report on public securities to double-check that all my transactions have been properly reflected in broker 1099s.
Another way I use my Quicken investment data is for evaluating performance. For example, I mentioned that some of my municipal bond holdings are held directly, while some are in a mutual fund. For the time period since Jan. 1, 2000, Quicken’s Investment Performance report tells me that the IRR on the directly-held bonds has been 4.54%, while the mutual fund has returned 4.19%. These are tax-free returns, so I think they are both pretty reasonable.
I also look at equity performance by investment sector, using Quicken’s Investment Performance Report. I have set up custom Investment Goals for “Tech”, “Consumer Products”, “Industrial” and “Global Funds” and am pleased to see that, in recent years at least, the “Tech” sector has been performing well.
In summary, Quicken allows me to keep track of widely varying types of investments and know where I stand at any point in time. It provides essential tax-recordkeeping and Quicken’s investment reports have given me the insight to be a confident and successful investor.