Your Mac and Your Money: Portfolio Folly

A few years ago, a friend asked me if I could help to set up her finances in Quicken. She was particularly interested in tracking investments, of which she had quite a few. (She had invested a small windfall in a successful software company more than ten years ago and had held onto her shares through umpteen stock splits.)

We never found the time.

The moral of the story should be that my friend went on to live a happy and prosperous life without ever knowing, on a day-to-day basis, how the seesawing NASDAQ was affecting her net worth. In real life, though, she went through a contentious divorce and decided to sit down and organize all her stuff in Quicken to make things easier for the lawyers.

So, the actual moral of this column is that I hope most of you who've never gotten around to entering all the particulars of your investments into a personal finance application or Web site can keep putting it off indefinitely. Why? Because nine times out of ten, it's a waste of time. For my friend, it was a waste of time, until she really needed to do it.

Time, I happen to believe, is a precious commodity. One thing I actually like about Quicken (and my Mac in general), is its potential for saving me time. Using Quicken, I can pay bills faster. I can balance my checkbook faster. I can shop for insurance or a mortgage faster. After all, Bill Gates may be worth a few bucks more than me, but last I checked, he still gets only 24 hours a day. Like a lot of people, I've started evaluating the worth of services based on how much of my time they give back to me.

So why would I want to spend my time tediously typing the transaction details of my stock portfolio every month? Let's take that one step further: Why is it a bad idea apart from it being a waste of time?

The biggest argument against tracking your investments on a computer is that it encourages you to focus on the trees rather than the forest. Successful investing, we're told over and over again, requires a long-term outlook -- the exact opposite of the day-trading mentality. (If you are a day trader, you have my insincerest sympathies. I hope that by now you've figured out that you need to track your trades with Quicken, or something even more high-powered, so that you can accurately report your capital gains -- and losses. Elcheapo.com won't send you a summary of that information at the end of the year. It's up to you to keep track.)

Don't get me wrong. I think online trading is great if it means that I don't have to spend hundreds of dollars in commission every time I buy or sell a stock. I simply do my best to resist the temptation to trade willy-nilly just because I can. However, I can buy and sell stocks online and cheaply without wasting my time by maintaining a computerized stock portfolio. And if I really need to know how many shares I have of Amalgamated Lint, I can get the info without using Quicken. Almost all brokerage firms -- even really cheap ones -- now make your account information available to you online.

I suspect that Intuit still offers a portfolio "management" feature in Quicken for the simple reason that many of its customers have dutifully entered this information for years and would pluck out their fingernails with pliers before admitting that they've been wasting their time. Certainly, Intuit hasn't made many improvements to the investment portfolio feature since it was introduced sometime during Bush senior's administration. In fact, whole versions of Quicken for the Mac have come and gone without any changes to the portfolio feature. But can I actually sell or buy securities using Quicken? Nope. For that, I still need to go to Elcheapo.com.

This week, another friend asked me to help get her finances entered into Quicken. She has some mutual funds. Maybe a money market account. Possibly one or two stocks. My advice to her will be to forget about tracking the investments in Quicken.

If she wants to enter the broad details of her portfolio somewhere on a personal-finance Web site such as Yahoo Finance, SmartMoney.com, The Motley Fool, or even Quicken.com, then fine -- maybe it will help her feel good about how much she's saved. But a better use of her time would be to learn a bit more about the investments she's made. Do the companies have good long-term growth prospects? How are the mutual funds performing compared to their peers? And, does she have a reasonable mix in terms of securities versus funds versus bonds? She can get help with all those things at the aforementioned personal finance Web sites. In the end, she'll have done a lot more to improve her investing than she ever could have by typing in exactly how many shares she's reinvested each month.

Of course, someday, the free portfolio software that you get from your broker will rival what Quicken Deluxe now offers for $59.95. Or, even better, personal stock-portfolio sites on the Net will be able to receive updates directly from your broker or brokers. Maybe then I'll reconsider my advice. Otherwise, take the time you save by not updating your Quicken stock portfolio and use it to learn how to fly-fish, read a good book, or spend a day at the park with your kid. In the long term, it'll be a better investment.

JAMES BRADBURY is the former editor of MacUser and former online editor of Macworld . He also writes the Macworld column Your Mac and Your Money.

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