Time to leave the hassle behind

Kiplinger's Personal Finance Magazine, Jan, 1998 by Robert Frick

ODIOUS TASK 1 Managing a gaggle of FINANCIAL STATEMENTS

When Anne McIntyre, 33, left her job at Chevron to become an apprentice river pilot on Oregon's Columbia River, she also made a full-scale effort to rid herself of financial tasks that were taking time from her hobbies, which include surfing and sailing. Her most odious task: tracking her investments. As the number and diversity of her investments -- mainly mutual funds -- grew, "the record keeping became a real chore," she says.

Her solution was to open a Schwab OneSource account, which allowed her to consolidate her mutual funds under the Schwab umbrella and get one monthly statement instead of many. Also, instead of keeping track of all those fund company "800" numbers to handle transactions, and instead of filling out special forms when she opened or closed accounts, she now taps into her account from her home computer. (Such transactions can also be done by phone.)

Tracking mutual funds is just one of the little financial rituals gnawing at our time and patience. For instance, every month around the same date, most of us pull out our checkbooks and write easily 15 or 20 checks to the same outfits -- the phone company, the credit card company, the mortgage company. Then we put return addresses on the envelopes, hunt up some stamps and trek down to the mailbox. Writing checks, keeping income-tax records, balancing the checkbook and myriad other financial chores take hours every month -- time better spent making or spending money, rather than managing it.

If you own mutual funds, moving to OneSource, or a similar program at another brokerage firm, really hacks away at hassle. Consider that the typical mutual fund shareholder owns three funds in two different mutual fund companies. As a reader of this magazine, odds are strong that you own funds in three or more fund families. Cutting your statements to one a month is easy: Most brokerage firms transfer the funds for you after you fill out a form giving permission.

Dozens of full-service and discount brokerages feature mutual funds on their menus (Schwab, for example, offers more than 1,000 and Fidelity about 800 no-load, no-fee funds). Jack White (800-233-3411) and Waterhouse (800-934-4410) offer the best balance of wide selection and low fees (see "Best of the No-frills Brokers," Nov.). In the case of Jack White, you can select from among nearly 1,200 no-load, no-transaction-fee funds and more than 4,700 additional funds for which you would pay a small commission. Waterhouse has more than 800 no-load, no-transaction-fee funds and more than 4,000 transaction-fee funds.

ODIOUS TASK 2 Computing TAXES ON STOCK TRANSACTIONS

The taxpayer relief act of 1997 must seem a cruel joke to those who actively trade stocks. The multitiered system for determining tax rates for capital gains and figuring out which losses can offset gains may be a boon for accountants, but it has created a paperwork purgatory for investors. The instructions for Schedule D have jumped from three to four pages, and the form itself is 31 lines longer.

Efficient record keeping is now a must. Sue Cowperthwaite says that the system she and her boyfriend, an active stock trader, formerly used was to "put all the statements in a big drawer" -- which made sorting through them at tax time a nightmare. Now the Middletown, Conn., woman keeps separate files for sell orders and buy orders, arranged alphabetically by company. When a sell order comes in, she attaches the buy order to it and places both documents in the sell folder. Figuring taxes is now a whole lot less time-consuming.

If you're a customer of any of a handful of brokerage firms -- including E*Trade, Fidelity, Schwab and Waterhouse -- you can download your transaction data into the Quicken money-management program (you can also download Schwab data into Microsoft Money). But Cowperthwaite doesn't see the need to automate something that works well enough by hand -- and she makes her living as a software instructor.

Capital-gains grief is also felt by people who own stocks through dividend reinvestment plans, or DRIPs (in which dividends are automatically reinvested in additional shares of stock). While a DRIP is an efficient way to buy shares, when you sell them, you have to figure the cost basis of shares you may have bought at hundreds of different prices. If you need an orderly way of keeping track, consider a simple software program called Portfolio Tracker, designed especially for DRIP investors. It keeps track of shares in the plan, their current market value and yield, estimated gains or losses, and average cost and yield per share. Of course, you still must enter data into the program. The program costs $39 plus $4 for shipping. Write to Evergreen Enterprises, P.O. Box 763, Laurel, MD 20725; or call 301-549-3939.

ODIOUS TASK 3 Paying BILLS

A lot of companies that you send checks to will automatically deduct monthly payments from your checking account or from a money-market fund. The list typically includes your mortgage lender, utility company and car-loan holder. If just three bills are paid automatically, you'll save yourself from writing 36 checks a year (and paying $11.52 in postage). Plus, many auto lenders will lower the interest rate on your loan if payments are deducted automatically. As more vendors and banks create such links, the use of automatic deductions is expanding. Warren Mackensen, a financial planner in Hampton, N.H., even has his monthly church donation deducted automatically.