Investors build a portfolio based on requirements. For example, you may plan a portfolio based on retirement goals, a portfolio based on risk tolerances, a portfolio with an annual investment return of 8%, or only Portfolios that want to beat a benchmark. Planning a portfolio is not an easy task. But managing your trading account to track your portfolio is a tedious task; Your trading account often has traded many transactions, and the price of funds or stocks will change at any time, and may declare dividend/split at different points, Or your portfolio is adjusted accordingly.
With so many changing investment conditions, you must also want to know: What is the value of the portfolio assets now? How is my real investment performance? Have I achieved my goals? What is the reason why the actual investment performance is inconsistent with the target, the market performance is not as expected, the planned portfolio is not suitable or because the investment doesn’t follow according to the portfolio.
Based on the above considerations, there are four key factors in choosing portfolio management software
Cost of use
The portfolio software needs to be used for a long time, and the cost of use is of course the lower the better.
Portfolio tracking software can help us automatically synchronize trading accounts, eliminating the tedious work of entering transaction details.
Calculate Time-Weighted Return
There are two methods to calculate real investment return: Money Weighted Return (MWRR) and Time Weighted Rate of Return (TWRR). The return calculated by MWRR is affected by the amount of investment at different times. TWRR is not affected by the amount of investment, showing the real performance of the account.
The performance of an investment is not only the absolute value of the rate of return, but the result of comparison with a benchmark. Different people have different needs in their benchmark. Perhaps the performance of S & P 500 large-cap stocks, the bond market index, and even a target portfolio.
If you want to track your portfolio, you can use our online stock portfolio for free (single trading account tracking) – i3DIY’s Portfolio Tracker, not only because it is simple, but more importantly, if you have any Asset allocation plan, Portfolio Tracker can integrate with your plan, so that your investment can be invested according to the plan. The following steps tell you how to use i3DIY’s Portfolio Tracker to track your portfolio.
Step #1: Decide your benchmark
Link to i3DIY Wizard and select Manual Portfolio，click [Next Step]
I3DIY takes assets as the benchmark. For example, if you want a large cap index, you can enter IVV, SPY, VOO and other ETFs tracking S & P 500, or directly use the target portfolio as the benchmark, please refer to Manual Portfolio for details.
Step #2: Sign up an i3DIY membership to track your portfolio.
Please refer to Join i3DIY Membership for details.
Step #3: Account aggregation
Entries of your email and password to login i3DIY.
Click [Link] to link an account.
i3DIY provides two options for account aggregation. Sync Account – Select the brokerage of your account In the Choose the Brokerage list and click [Enter Account Login Credentials] to sync with your brokerage account automatically. Manual Account – If you don’t want to provide the login information of your trading account or the brokerage is not in the list, you can click [Create a Manual Account] to manually enter the transaction details. The entries of dividends/splits of funds and stocks are tedious and easy to forget tasks. You can choose to automatically add the dividends/splits transactions by i3DIY, as shown in the AUTO column below, There are ticked transactions.
Step #4: Portfolio Tracking
You could check the positions of your account. I3DIY will also display your current overall account value, accumulated profit and loss and today’s profit and loss based on the latest price (30 minutes delayed).
Step #5: Benchmark Comparison
After investing for a period of time, you must want to know whether your investment compares with the target portfolio, S & P 500, and other selected benchmarks whether the performance is better or worse. The investment gain/loss report of a brokerage shows the unrealized profit and loss of the assets listed on your account and does not include realized gain/loss and distributed dividends.
i3DIY Portfolio Tracker calculates the Time-Weighted rate of return of your investment account every day, so that you can always get the real return rate in different periods, and can be used to compare with your various accounts, portfolios, benchmarks, and calculate the annualized return , Risk, Sharpe Ratio and Tracking Error.
Portfolio Tracker also provides rich charts, allowing you to choose different periods for comparison.
Portfolio Tracker is part of the overall functionality of i3DIY. After establishing a portfolio plan and linking an investment account, we will send you Rebalance Alert to remind you whenever the current status of the account deviates from the target portfolio. You can upgrade to use the “Smart Rebalance” function to generate the buy/sell orders report for portfolio rebalance.
At the beginning of this post, four key points are put forward, in fact, there is only one purpose-to help us understand whether the performance of the investment is in line with the goals at any time, which in turn affects the investment decision. To achieve this goal, rely on Time-Weighted Return to calculate the overall return on investment.
Let ’s use a more straightforward example to illustrate the importance of calculating the overall return. Suppose that I bought the stock ETF – SPY and the bond ETF – AGG two years ago and hold it until now. If your software only calculates unrealized gains/losses and the dividends are not included in the calculation, the difference% in returns is 41.75% and 56.39%, which completely deviates from the real investment performance. You may also sell these two ETFs because of the calculation deviation and think that the investment return is not as expected.
Adj. Close Price
Adj. Close Price
|SPDR S&P 500 ETF Trust (SPY)||293.21||293.21||264.98||254.74||10.65||15.10||41.75|
|iShares Core U.S. Aggregate Bond ETF (AGG)||117.36||117.12||105.68||99.86||11.05||17.28||56.39|
What is the Portfolio Tracker you are using now? Do you have any factors I didn’t mention in this post?