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.

Thursday, January 20, 2011

Determine Return on Assets With Schwab Application

How to calculate performance of a portfolio is a question I get quite often. Many times I go through the calculations for time weighted return; but, by looking at peoples' faces, I can tell they don't find this a lot of fun.

But I stress the need for DIY investors to understand performance and to compare against a benchmark. Well, Schwab has put it all together, including benchmark comparisons. Your broker may have a similar freebie online. It is why I urge people to check out all the tools at  their broker's site and putter around a bit.

Let's see how easy it is with Schwab to get performance info.

In previous posts, I showed how  to check out Schwab's models. Getting a model, i.e. deciding on an asset allocation, is where investors should put their effort. They should select a model that fits their risk profile, i.e. one they can pretty much stick with through thick and thin. Many would agree that the biggest mistake many investors made over the past few years was bailing out in the downturn and not participating in the recovery.

 The  model you pick is important for another reason - it will be your benchmark. It will be the ruler you measure performance against to ensure you are staying in line with the market (or "beating the market" if that's your goal).
If you're on Schwab, click the "Portfolio Analysis" tab on the entry page. At this point, following previous posts, you have set up a portfolio combining your accounts. The first three items on the graphic to the left have drop-down lists. Check them out. If you have identified various sub-groupings of your accounts and selected models, you can easily examine their performance. Run the report by clicking "Go" and this is what you get:


Notice performance for the portfolio is over various periods. You can set the periods however you want. At the bottom is the return on the benchmark. In this case, the benchmark was Schwab's "moderately conservative" model.

A footnote immediately below the table specifies the benchmark as "Moderately Conservative was composed of 50% Barclays Capital Aggregate Bond (Fixed Income), 5% Russell 2000 (Small Cap Equity), 25% S&P 500 (Large Cap Equity), 10% MSCI EAFE (International Equity), 10% Citigroup 3 month US T Bill (Cash Investments)."

This, again, is one of those situations where it takes considerably longer to explain than  to do. At the end of the quarter, when you are reading financial news and it talks about the markets, you can, in a few minutes, go online and see your performance.

It goes without saying that this only touches on what the investor can do with this app. For example, there is a nice graph below the table after you have run the report that shows the progress of the account.

It is my understanding that this may not have been made available to all Schwab clients and it may be in the latter stages of testing. If you have it, again, play around with it. It may be exactly what you are looking for. If you don't have it, make a phone call and request it.

Finally, the DIY investor is getting to the point where he or she has necessary tools to manage investments without it costing an arm and a leg.

I am not affiliated with Schwab and present this for informational purposes only.

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