In my last 5 blog posts I described a system that I cobbled together for tracking mutual fund accounts in hledger. What are the advantages and disadvantages for this approach?
Advantages:
- – By tracking my mutual fund activity in hledger, it’s easy to get reports on earned interest and dividends. This information can be useful for tax purposes or planning in general.
- – I have a recurring do-list for reconciling my accounts. One advantage of reconciling accounts is that if there were any fraudulent activity happening, reconciling should uncover it.
- – I created my own system for tracking mutual funds. For example, I track mutual funds by share amount rather than price. This works for me, and if there are any changes needed in the future, I know how and why I set up my system. This should make it easier to make changes than if I had simply copied someone else’s system.
Now for the disadvantages.
- – It’s work to set up and track mutual funds in hledger or any other accounting system.
- – Tracking is not completely necessary in the sense that you can still find interest and dividend income information directly from the mutual fund company. Additionally, in terms of spotting fraudulent activity, you can do that by reviewing your statements.
- – I created my own system for tracking mutual funds. Wait a minute, wasn’t that an advantage that I mentioned above? Yes, but it’s also a disadvantage. And the disadvantage has a name: The IKEA Effect.
My summary of the IKEA Effect is that people prefer something they have put together themselves, even though they knew that they made a mistake or two along the way, to giving it away in exchange for the same item correctly assembled by an expert.
Therefore, I may have too glossy of a view of my system simply because I came up with it.
In spite of the disadvantages, there are enough advantages to motivate me to continue mutual fund tracking in hledger. I like how I can get a report across multiple income categories or years with a single command. I like the idea of watching financial accounts closely (not obsessively, but closely). So, tracking mutual fund activity in hledger will help me focus more on these accounts. Finally, perhaps my increased attention will lead to better knowledge, and better knowledge will lead to better decisions.