Professionally managed retirement accounts - track as Investment or Asset in Moneydance?

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psantucc

28 Jan, 2024 08:16 PM

Opinions welcome, as I am wholly ignorant in this area. Historically I have been uninterested in the details of retirement accounts; that's why I have them professionally managed.

With the recent death of my father, however, I have taken over managing my mother's accounts. She is living largely on the revenue from retirement accounts, and tracking her net worth will likely become significant for Medicaid and other means-tested benefits in a few years.

What I would like to do is maintain Moneydance accounts for each of her retirement accounts, and accurately track withdrawals and gains, but only as a monthly or quarterly composite. I don't want to track transfers between the mutual funds and/or cash assets that comprise each account.

Given that desire, is there any advantage to using Moneydance Asset or Investment style accounts? Is it simply a bad idea to not track details,. or impractical within Moneydance?

  1. 1 Posted by dwg on 28 Jan, 2024 08:33 PM

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    It depends on your overall objectives, it can be done either way and I have tried both.

    In my part of the world getting the transaction and loading them into any software is a nightmare and would just about be a full time retirement job having to restructure what I could get to be able to load it. It just is not viable.

    I tried both account types.

    Asset accounts allowed me to keep track of the balance by entering transactions that adjust the balance for increases/decreases in value as well as for withdrawal of funds, it was pretty simple and just required me to add a couple of more categories for the value changes.

    In my case I was looking for more and turned to using investment accounts. I use a spreadsheet for each account I have to calculate the share price for me to enter each month as well as to calculate the price when I withdraw or deposit funds. as indited I only manage monthly data and only at the total value of the fund, but it does allow me to manage and look at the data as an investment and see value changes over time etc as you can do with shares.

    It's basically your call which approach you take, I created a new test data file and with some limited data just tried out each approach to settle on what suited me.

    The investment approach suited me and setting a share price means I do not have to worry about setting up categories and making transaction entries to adjust the value of the fund that is reflected in the share price I set.

  2. 2 Posted by Bob Sacamano on 29 Jan, 2024 10:55 PM

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    I do similar to dwg - with a minor twist.

    In Australia many superfunds do not use a unit price/share price/stock price approach to valuation but a complicated chain of daily crediting rates. It's incomprehensible for investment tracking.

    What I've settled on is to use an investment account. Each transaction, including the starting balance, is a cashflow. Each cashflow is used to buy or sell at $1 stock price - so dollars in and out. End of each month I do the following check to update the stock price in MD:
    Cost basis should be the net Cashflows over all time
    Total Value from the investment website
    Divide the value by the cost basis for unit price for the month.

    The drawbacks are that you have to remove the $1 stock buys/sells from the price history, and finicky buy/sell transactions. The latter I avoid by just doing a monthly calculation and one cashflow/buy transaction of the net of the month's flows (rather than each individual little flow).

    My theory is that the stock price is then always a reflection of the XIRR; XIRR being - what interest rate can be applied to each cashflow entry to get it to today's value.

    Asset accounts do not let you track your returns independently of your broker/pension account provider.

  3. 3 Posted by psantucc on 21 Feb, 2024 02:48 AM

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    Thank you both for differing perspectives and techniques - particularly the pros and cons of each practice.

    I've decided to handle the accounts as assets, making transactions to an arbitrary "change of value" category to cover the changes in aggregate securities value and the cash reserve component of the IRAs, and fees and transfers to bank accounts handled just like bank accounts.

    I don't use Moneydance to figure total tax liability anyway, preferring to use the various W2 and 1099 forms. I make Moneydance reports for theoretical deductibles and hand them off to my accountant too - though the itemized rules have changed such that it hasn't helped in more than 10 years, it makes me feel diligent, Anyway, I'm not fussed that the transfer doesn't record as income when it hits the checking account.

    Similarly I could give a monkey's about tracking individual securities apart from my advisor and brokerage statements. No criticism of those who do find it interesting, but I hate the vocabulary and suck at it., so I accept the risk of trusting a pro. So far, so good!

  4. 4 Posted by dwg on 21 Feb, 2024 03:56 AM

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    The method you have chosen should work well for what you want and be pretty straightforward to maintain the data.

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