Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Wednesday, December 29, 2010

DIY Newbie - Portfolio Analytics - Part 5

The DIY investor typically has at his or her fingertips powerful technology. This technology is easy to use, is indispensable in setting up and tracking a portfolio, and saves a lot of time in monitoring the portfolio. The way to learn it is to get your hands dirty and play around with it. Spending a bit of time now will pay huge time-saving dividends in the future.

Those of a certain vintage will recall days of keeping much of the data by hand. Today the novice has available much more than the institutional investor of even 15 years ago. The trick is to learn to use it.

I tend to use Schwab, so I'll illustrate it here; but similar tools are available at most major brokerage firms. But again, I find that people tend to approach brokerage inline sites like the old VHS systems where we learned how to play a tape and that was about it. We were ignorant of its other functions.

It is easy to get on Schwab, consolidate your accounts, and select a model portfolio. The model portfolio, in turn, will specify targets for various classes of assets. For example, it will specify a target for small cap stocks. Then one of the important tools is the asset allocation pie chart and table which shows you how far off target you are for each asset class both in dollar terms and percentage terms. In other words, it shows you where you have to take action and by how much to get closer to target. It simplifies the whole process of rebalancing.

Suppose you want to go one step further and drill down to see a listing of assets by account and sector? Click "Schwab Portfolio Checkup," "View Holdings," and "Asset Class Details." You get this table for each asset class.

CLICK TO ENLARGE Notice the information provided. Here we have "Large Cap Funds." You get the "gross expense ratio," the "asset class," "% of portfolio" etc. Also the account numbers, which have been erased here, are provided.
Notice the "multi-class" funds. These are allocated to appropriate sectors on the basis of Morningstar breakdowns.

Learning to use this technology simplifies portfolio management and is worth the time investment.

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