Whether you’re just dipping a toe into the world of investing or you’re looking for ways to optimize your existing portfolio, knowing how to track your investments is essential. If you want to grow your net worth, you need to understand where your assets are and how they’re performing — yet this can be tricky if you have investments that are harder to track (e.g., real estate, private equity) or you’re using various investor platforms.
Still, no matter what you’ve invested in, you can and should manage your investment portfolio effectively. In this article, we’ll go over the different ways you can track your investments, along with some helpful tips for doing it on your own.
Some investors like to take risks, while others are more conservative. Some invest over the short term, while others take a more long-run approach. But ultimately, we all have the same goal: To grow our net worth. While you could opt to take a “set-it-and-forget-it” approach by leaving your funds to (hopefully) grow without checking up on them, ambitious investors generally like to be proactive rather than leaving everything down to blind faith.
Tracking and managing your investments is crucial for the long-term success of your portfolio since it allows you to:
There’s no wrong way to track your investments (as long as the method you choose is accurate). Below are a few common approaches, along with their advantages and drawbacks.
If you’re new to managing your investment portfolio and don’t know where to start, it makes sense to consult a professional. A financial planner will ask you about your goals and personal preferences (such as how much risk you’re prepared to take), and devise a tailored strategy for your needs.This can also be an option to consider if you don’t want to keep a close eye on how your portfolio is performing or you have a complex financial situation.
However, working with a planner comes with a cost and can translate into steep portfolio management fees that will eat into your earnings. You may also deem it unnecessary if you already have a good knowledge of investing and feel confident about key concepts such as optimizing for taxes and the importance of diversification.
If you like the idea of getting investment advice from someone else but don’t want to pay steep fees for an account manager, robo-advisors offer a compromise. Robo-advisors are automated digital investment managers that create, balance, and maintain a personalized portfolio based on your goals. In other words, they do everything a financial planner does, but the advice comes from AI rather than a human, which helps to cut costs. There are several robo-advisors you can set up through respected online services or even traditional banks.
However, many robo-advisors platforms are somewhat simplistic.They may work well for a beginner who wants to create a basic portfolio, but they’re less useful if you want to choose a more personalized strategy or have complex needs (e.g., you want to retire early and also save for your children’s education).
An even more affordable option is using online platforms or apps to track your investments while handling the management yourself. This way, you only need to pay a nominal fee for the software rather than a percentage of your total portfolio (which is the case with financial or robo advisors). There are even some free options, but these usually come with limited features and don’t let you track alternative investments like real estate or cryptocurrencies.
Vyzer caters to complex portfolios and allows you to get an overview of your assets in one place. It syncs with your accounts automatically so you can access real-time data, and you can even predict future cashflow using AI tools. This is a great option for more experienced investors who want to make their own choices (or beginners looking to learn).
If you like to get your hands dirty and really understand what the numbers are doing, a final option is to track your investments manually using spreadsheets — or even pen and paper. This is by far the cheapest option for managing your investments. There are also some free templates floating around online.
However, it’s not exactly the most convenient choice, and it’s likely to take you a while to set up your initial spreadsheet — or to rejig everything when you decide to invest in something new. There’s also a reasonable chance that you could make an error and end up with inaccurate calculations.
If you opt for a more hands-on approach to manage your portfolio rather than using an advisor, it’s important to know what you’re doing so you can maximize your returns. Here are a few of the best tips and tricks you can apply to your tracking strategy.
Don’t dismiss bank or investment account statements as just another piece of paper — they contain crucial data. If you’re taking a manual approach to investment tracking, it helps to keep a record of all your transactions and check your monthly, quarterly, and yearly statements. This helps you to understand your portfolio’s performance year-over-year, as well as the fees you’ve paid.
It’s also important to check that your statements contain up-to-date information and are consistent with your previous documents. Does it have the right address? Do the numbers on each statement match up and account for all the trades you made? Is there any account activity you don’t recognize?
If you look at your accounts and see that they’ve achieved a negative return of -5% over the past year, you’re probably going to feel disappointed. But before you decide to sell everything and put your money elsewhere, you need to check how the market as a whole has performed. If the entire world has been in a recession, it’s unlikely that you’ll have made a tidy profit.
To figure this out, look for diversified indexes that represent the wider economy, such as the S&P 500 (which contains stocks of the 500 biggest companies in the US). These indexes are meant to act as benchmarks that make it easier for you to see how a combination of investments might measure up. If you’ve chosen riskier investments, you have a reasonable chance of both underperforming and overperforming the market as a whole. It’s not always the end of the world if you have a bad year, but consistently poor performance is a sign that you may need to reconsider your investments.
While it’s excessive to concern yourself with fluctuations in your portfolio month-to-month, it’s a good idea to take stock of your assets once a year. Check-in with your portfolio to see how your investments are performing compared to your expectations and how your overall allocation compares to this time last year.
If you find that an asset has achieved poor returns, you might be tempted to sell it and replace it with an asset that did better. However, it’s important to consider context and take a long-term view. For instance, maybe your bitcoin did really well and your blue chip stocks only enjoyed moderate increases. Does that mean you should sell them all to buy more bitcoin? For most people, the answer is no, because bitcoin is one of the riskiest and most volatile investments out there and there’s no guarantee it will enjoy the same performance next year.
In fact, many people decide on a preferred asset allocation based on their risk preferences — in this case, you might decide you don’t want to invest more than 5% of your total portfolio in crypto since it’s too risky. So, if bitcoin increased in value so much that it became worth 20% of your portfolio, you might decide to sell 15% of it and replace it with something safer.
Are you deciding how much you can afford to invest on a month-by-month basis? While this flexible approach might sound appealing, it’s much more efficient to set up automatic deposits from your paycheck to keep your portfolio growing with minimal intervention. This is also a good way to establish disciplined investing habits.
If you’re not sure how much to commit to, it may be time to start a budget. After your monthly expenses and some discretionary spending, how much do you have left to invest? Commit to sending this straight to your investment accounts after receiving your wages so you’re not tempted to spend it elsewhere.
Before making a major move, like selling off an asset, it’s important to understand the tax implications. If you make enough profit from selling your investments and they’re not in a tax-efficient account like an IRA, you may be triggering capital gains tax. Speaking of which, are you maxing out these tax-efficient accounts before turning to other options, like general investment accounts?
If you’re not sure what any of this means, it may be a good idea to sit down with a tax advisor on a semi-regular basis to go over your portfolio and understand your tax requirements. Once you understand how everything works, you can make smarter choices for the future.
Whether you’re already using software to help you track your portfolio or you’re committed to handling everything manually, it’s always worth assessing whether there’s a useful tool you could adopt. As we’ve mentioned already, online platforms like Vyzer can make portfolio management easier by giving you a complete overview of all your assets in one place, so you can compare their performance and rebalance more efficiently.
Depending on your approach, you may also want to consider a round-up app like Acorns to invest your small change from purchases or a budgeting tool like Mint to help you work out how much you can afford to invest each month.
Learning how to manage your portfolio is a critical step in growing your net worth and becoming a successful investor. Whether you opt to work with outside help like financial planners or robo-advisors or to do everything yourself, make sure you have the knowledge and tools you need to succeed.