10 Questions You Must Answer To Stay On Top Of Your Portfolio

An individual investor today is very fortunate. The amount of information available is absolutely mind-boggling! Laws have been put in place to level the playing field so that no one person or group has an unfair advantage.

The question now becomes, who can best manage this information and make the best use of it. What questions should an investor ask to stay informed?

The following are the 10 questions I asked myself and to get accurate answers was… surprisingly hard!

1. What is my Net Worth?

Seems like a seemingly simple question but to get an accurate answer can be very frustrating! Net worth is simply a difference of your assets and liabilities. But then to get a real picture I need to take into account my mortgage, credit card payments, auto loans, cash in bank, my IRAs, 401Ks, CDs, bonds and what not! And like any typical investor, all these are in different accounts. I have to manually log in to each account and calculate the current value.

And to make it even worse, these values are bound to change the very next day!

2. How balanced is my asset allocation?

The cardinal rule of investing is never to put all your eggs in the same basket. Different asset classes move differently at any given period. You should have a balanced portfolio to minimize risk. But in reality, doing this is quite complex.

I have my assets in various accounts and the assets themselves are of different kinds – stocks, bonds, cash, mutual funds, ETFs etc. I need to go through every single asset in all my investment accounts and classify them according to their type – Large Cap, Small Cap, Mid Cap, International, Alternative, Bonds etc. Once that is done, I need to define what is an ideal asset allocation for my situation, calculate my current asset allocation and compare it to see the skew.

This could easily take an entire weekend!

3. What is my Cash Flow?

The only thing I know for sure is my paycheck which is consistent. I only have a vague idea about the dividends that are paid out, the fees collected by brokerages and fund companies, the taxes withheld or penalties charged! All this happens in the background, silently month after month.

Any good investor should be on top of these, but keeping track of these across accounts is no easy task and I have too many securities to keep track of.

4. How are my investments doing?

Once again, seemingly a simple question, yet I can’t give an accurate answer! I can’t even tell how I’m doing in relation to the S&P 500! The S&P has been on a roll this year, yet I can’t tell if I’m doing better than the market or in reality lagging it! To get a real picture I need to take into account assets in all the accounts – and not slice and dice investment accounts.

5. How much fees am I paying for my investments?

In other words, what is my overall expense ratio? If I’m paying 1%, I’m paying too much! I know that, but then calculating this is a daunting task!

6. What are my best and worst investments?

If a security is doing poorly or wonderfully, I need to know the cause and take appropriate actions. They say listening to CNBC everyday is injurious to an investors health. I agree. But then if I don’t I could’ve missed on the BP fiasco! Knowing what is doing well and poorly will ensure I don’t sell or buy securities at the wrong time!

7. Is my income growing?

Every investor should strive to increase his income quarter after quarter. But then companies cut and raise dividends all the time. You need to know what effect this has on your overall income and make adjustments to your portfolio accordingly.

8. How am I doing?

My investments at a glance. A precise summary of how I’m doing. Right now I can tell how my 401K is doing and each of my IRAs are doing, but not collectively since they are held in different accounts.

9. Is it time to rebalance?

If I had a lazy portfolio, then rebalancing is relatively easy.

But I’m a hybrid investor. A little bit of Buffett and a little bit of Bogle!

I buy shares when they are on sale and index when they are not! But I still believe in the wisdom behind rebalacing. To rebalance I need to know what assets, across all my accounts, have started to skew.

10. Am I on track?

I think this is the most important of all. Every investor must have a future projection on where he needs to be when he retires and based on his temperament, allocate his assets accordingly. But then that involves work. You have to make realistic assumptions and make educated guesses on on different asset classes based on their historic performances.

This needs to be compared with where you are and if you will get to where you want to be, if you continue your current path.

Asking questions is easy! Every investor at one point must’ve pondered over these. Yes, it is time consuming, but doable. But must you do it the old-fashioned, manual way?

What I want to show you is how I found answers to these questions.

No I did not waste a weekend with a calculators and spreadsheets! I want to introduce you to a free online tool that I’ve been using since June ’13. I did not rush to do a review because I wasn’t sure initially if this is something I would continue using, but after 6 months, I’m convinced this tool is indispensable!

I log in to this tool more often than my brokerages!

This tool is called Personal Capital. I’m going to show you how Personal Capital helped in answering each of my 10 questions.

1. What is my Net Worth?

Personal Capital calculates your net-worth in real time

Personal Capital calculates your net-worth in real time

2. How balanced is my asset allocation?

Personal Capital computes the allocation of your assets across investment accounts

Personal Capital computes the allocation of your assets across investment accounts

3. What is my Cash Flow?

Personal Capital calculates your cash flow (income - spending) for the past 30 days and as of today

Personal Capital calculates your cash flow (income – spending) for the past 30 days and as of today

4. How are my investments doing?

You Index tells you how you are doing with respect to the market

You Index tells you how you are doing with respect to the market

5. How much fees am I paying for my investments?

Personal Capital 401K Fee Analyzer

Personal Capital 401K Fee Analyzer

6. What are my best and worst investments?

Losers and gainers of the day

Losers and gainers of the day

7. Is my income growing?

Personal Capital summarizes all your investment income and expenditure across accounts

Personal Capital summarizes all your investment income and expenditure across accounts

8. How am I doing?

All investments at a glance

All investments at a glance

9. Is it time to rebalance?

Helpful reminders to rebalance your portfolios!

Helpful reminders to rebalance your portfolios!

10. Am I on track?

Check in real time if you are on target

Check in real time if you are on target

Questions You May Have!

What is the catch? Is this a trial offer? Is my credit card required?
None, no and no! The service is free and you don’t have to provide your credit card.

Do you actually use Personal Capital?
I don’t endorse products I don’t use myself.

Can I use it on my mobile device?
Yes. It is available for the iPad, iPhone and Android devices.

How is Personal Capital different from Mint?
Personal Capital focuses on your investments while Mint is geared more towards personal finance.

My thoughts

I think this is a great tool. Personal Capital consolidates all your accounts and gives you a collective view of your assets and liabilities. At a quick glance I can tell where the leaks are in my investments. Penalties, charges, fees etc. For instance, when I receive dividends from a non-domestic company like PBA, taxes are withheld called foreign withholding tax. Easy to miss, if I rely only on statements from brokerage firms. Come tax time, I can deduct these foreign withholding taxes and Personal Capital makes it easy to see such leaks. (You can see this in Slide 3. When you click on Spending, it drills down to the details!)

That was just one example. After six months of using Personal Capital, I highly recommend it.

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36 thoughts on “10 Questions You Must Answer To Stay On Top Of Your Portfolio

  1. Thanks for the review. I’ve been wanting to get a better handle on our asset allocation and it looks like this could be a good way to do it. I do have a little bit of hesitation about plugging all of our bank passwords into one site- going to have to overcome that fear I guess, as I have heard this is a great site.

    • Your fear is reasonable, Dee. You should read up on Personal Capital’s security and make up your own mind. It is your money after all!

      Here’s a link that convinced me: https://www.personalcapital.com/safety-and-security

      • I’ve read that page before but they spend so much time name dropping (we’ve worked on X / we work with Y) that it twitches my spidey sense. I’m probably just being a nervous nellie, though. I actually acknowledge that different kinds of arguments will persuade different people, so it’s a legitimate strategy to provide more than one argument.

  2. These are all so important – balance especially, and what your best/worst investments are.

  3. Excellent review! I agree that today investors have resources at their fingertips that provide answers to crucial questions.

  4. Wow this is a really solid list of questions to stay on top of your portfolio. I only really invest in my 401k, though I hope to open an individual account at the beginning of 2014. I definitely should run through these questions to evaluate how my 401k is doing and whether I need to make some adjustments for the new year. Thanks for sharing!

  5. Are you concerned at all about security? I am a little worried about entering the password for a six-figure investment account, as raw text into a third party website.

    • Hi Steve, thanks for your comment. It is good to know you exercise caution before giving out your credentials to online sites. Very commendable.

      I too had the same fears. I did not rush to provide my brokerage credentials. Heck, I don’t even have a Facebook account because I don’t trust their ‘hol-ier than swiss cheese’ security!

      What convinced me was the fact that the people who are behind Personal Capital pretty much built the security system used by banks today. The CEO also served in the board of RSA Security (remember the security fob banks provide?).

      Personal Capital also uses two-factor authentication – pretty much standard these days.

      Of course there are no guarantees online – but I do hope Personal Capital lives up to their expectation.

  6. I started using personal capital a couple of months ago but still have not delve into all the resources it provides. I really need to into it more. Nice review.

  7. I’m the most concerned right now about fees and how to ensure that I have a low fee account.

  8. Liked the investment part of the article. Forced me to rethink my investment plan.

  9. I’m totally coming to you when it’s time for me to start investing. I am not even sure where to begin! I’m bookmarking this so I can come back once I’m in the game.

  10. I use Morningstar’s Portfolio X-ray to do essentially the same thing. Anyone can get it for free through T. Rowe Price. I think Protfolio X-ray does a better job of breaking down the components of a portfolio that is spread across many accounts. It is more work to input your current holdings, though. You have to actually enter the ticker symbol and the number of shares for each holding. It does get past the qualms that many people have about giving their account information and passwords to third party software.

  11. Personal Capital is providing excellent services. I think those questions are very important for any serious investor to answer.

  12. All of these are valid questions to ask yourself. Personally I like to make sure that my portfolio is more defensive than offensive each year. So my goal is always to try to seek index fund-like returns with better safety and consistency.

  13. I’ve been pretty married to mint, but one area it lacks a bit is investments. I’ll have to check personal capital out to keep track of my investments. Very interesting.

  14. I am interested in Question No. 2. I really believe of diversification of our investment not only to reduce the risk but also to maximize the potential to multiply from different money making vehicle. The more investment you have the more incomes you will earn.

  15. Hey MoneyCone, great read here. These 10 questions are really important, but I think you missed one. One of the biggest questions I ask myself is, “Could my money be more profitable in other investments?” as in other types of investments. I’d love to read something from you addressing that question in the future!

  16. Great summary. That’s why I like Personal Capital so much.

  17. I watch my cash flow pretty closely with Mint and since most of my funds are with Vanguard, I use their portfolio analysis tools. Personal Capital is a great tool for anyone that wants to get a better picture on their finances and how the portfolio is performing. Nice review!

  18. You answered my questions about Personal Capital. I’ve heard a lot of good things about their monitoring and it seems like a very helpful tool. I also like Jemstep for great investment recommendations in line with your risk tolerance. I could see both of these on-line resources being complimentary.

  19. Asking questions regularly is always a good idea when it comes to monitoring and managing personal finances. I try to review my budget and progress at least twice a year.

  20. It is very important to remind investors, they should be aware what fees are associated with the their investments. This will affect the money that you earn from any investment. When you can or if it possible, you want save money and that means watch the fees. Some fees are not avoidable but know your fees. You should be comfortable with paying them or find a better way to invest and save when it is possible.

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