With the arrival of free online personal finance tools (like Mint, Quicken Online, Wesabe, and many others), you might think that a desktop application like Quicken would be a hard sell. As it turns out, a lot of people out there are like me – a little uncomfortable giving out so much personal finance information to an online tool. Having been the victim of mild identity theft once already, I’m a little wary about giving out my account information unless I can see a direct benefit.
However, with a desktop application, that risk is minimized since everything is stored locally. That’s why I thought I’d give Quicken another, closer, look. My wife and I do financial check-ins every month and I figured just using Quicken to pull the data I already pull manually would be of great benefit. Little did I know how powerful Quicken was after I set up all the account information.
Financial Situation Snapshot
I think the reason why Quicken is so popular and why people use it has to do with the wealth of reporting it’s able to produce without much effort. After I entered all of my investment account information, from my broker accounts to my IRAs and 401(k)s, I was immediately able to see my asset allocation. I didn’t have to try to piece it together by logging into four different accounts and making an Excel spreadsheet. I just opened up a report.
Incidentally, I’m 58.92% large cap stocks, 11.62% small cap stocks, 10.62% cash, 9.91% international stocks, 8.55% domestic bonds and 0.38% in “other asset class.” It would take me at least an hour to compile that information manually, yet it and other similar reports are available with a click of the mouse.
Why Pay For Personal Finance Software?
The big reason why a desktop application is still better, and can charge money, comes down to two reasons:
- Features: Quicken has about everything I need in a personal finance management package and makes the free online tools look thin in comparison. It does it without selling you on a new credit card or bank account at every turn (that’s the business model for those online tools, you get the features for free but they try to sell you on a better products), though they do have places where they will give you offers from their “partners.”
- Security: One of the biggest dangers of storing your financial data somewhere else is that your financial data is somewhere else. When you have it stored locally, you have greater control over it’s location and then you can at least blame yourself if you lose it. While this doesn’t seem like a big deal to the Facebook generation, where online privacy is irrelevant, it will be once one of the major tools gets compromised.
My wife and I have a regularly scheduled monthly financial checkin  where we have a quick chat about, you guessed it, the financial state of our household. While I had a copy of Quicken 2009, courtesy of Quicken’s PR, I didn’t use it much and this past weekend I wanted to change that.
For our monthly checkins, I log into each of our financial accounts and record the balance in a spreadsheet. I call it our Net Worth Tracker because it gives us an idea of where our money is, how we are doing against our goals, and puts our finances in context. We don’t budget in the strictest sense of the world, so these monthly net worth checkins are our form of budgeting.
Quicken helps take an hour-long process down to about five minutes once the account information was entered. It’s not 100% perfect though because not every bank or brokerage integrates seamlessly with Quicken. At the moment, Dollar Savings Direct, M&T Bank, and TradeKing do not allow Quicken to connect and download information. However, outside of those three accounts, the rest are updated automagically.
Wealth of Charts, Reports
As I mentioned earlier with the investment asset allocation, the reporting features of Quicken are where I really find tremendous value. Almost every single report I can think of is available, from the basic asset allocation pie chart (that you can click on and break each category down to the specific asset) to security allocation charts to portfolio performance of each account. That’s just in the Investing tab (there are several others).
For each account, depending on its type, you can have a variety of views of the data. For investment accounts, you can see the performance of the portfolio over the last year, compare it with major indices, as well as its current asset allocation and current holdings. Under asset allocation, you can even set a target allocation and it will tell you what you need to adjust to reach your target. The first day I spent an hour just looking all the reports and being surprised at how easy it was to read.
Why So Positive?
At this point you are probably wondering why I’m gushing so much about Quicken 2010. I think I’m this positive because this is the first time I’ve seen an application that integrated data across my investment accounts and put it all in one place, complete with fancy graphs. Quicken Online won’t do this. Mint, when I looked at it, didn’t do this (I heard they started adding it but I never used it). This is the first tool that did this for me and I am surprised it took me this long to find out about it.
At this stage in my personal finances, making sure my investments are in the right order is paramount. I have enough invested that mistakes hurt and I’m young enough that silly mistakes can have a huge impact when I retire in forty years.
I’m a little upset with myself that I didn’t start using it earlier!
I know there are a lot of Quicken enthusiasts out there, what other features are there that I should dig deeper into?