Who’s Counting?

William Ehart

INVESTORS SHOULD diligently track two things: their portfolio’s performance and their asset allocation.

To monitor overall performance is humbling. If you’re like me, you eventually realize how much your cockamamie market-beating schemes have lagged the market—and it dawns on you that you could do much better by simply mimicking the market with index funds and occasionally rebalancing.

What percentage of your portfolio should be in U.S. shares, foreign stocks, cash, bonds and other assets? Only you can answer that. Question is, do you know where your assets are right now? Does that mix fit with your preferences and risk tolerance? How has it affected your performance?

I monitor my year-to-date performance and asset allocation in one place: an Excel spreadsheet that’s also a kind of investment journal. In it, I have running notes about moves I’ve made and those I’m considering. While I do use some tools offered by Yahoo Finance and Morningstar, I haven’t found any online portfolio trackers totally to my liking.

My spreadsheet is customizable to my precise and ever-evolving preferences, even if I do have to manually enter some data. The accompanying example is just a simplified illustration. My real spreadsheet has a lot more rows and columns. For instance, with the help of Morningstar data, I monitor how much I have invested in China, which I want to strictly limit.

I use the Fidelity Freedom Index 2035 Fund (symbol: FIHFX) as my benchmark. Its stock-bond mix is similar to what I’ve chosen for myself at this point in my life, but my portfolio has unique aspects that are important to me, such as the limit on China. My return was a little behind the Fidelity fund last year and I’m a little ahead this year.

One reason my returns have improved: About 40% of my actual portfolio is in the fund I’ve chosen as my benchmark. Another big chunk is in total U.S. and world index funds. Funny how that works: If you can’t beat ’em, join ’em. I now have a limit on how much I can invest in things that aren’t broad-market index funds.

The sample spreadsheet only tracks performance, total value and allocation to bonds, U.S. shares and foreign stocks. Pared down as it is, it would still be a perfectly useful guide for rebalancing when, say, the bull market pushes my stock-market weighting much beyond my target.

At the beginning of the year, by which time I’ve probably rebalanced my portfolio, I enter in the value of each investment as of Dec. 31 in Column H, which is where I list my cost basis for the year. I let the spreadsheet auto sum the values. I also manually type in the result just below the auto sum. That helps me check my math as the year goes on and the cost basis changes.

I update Column B every month—or whenever I feel like it—with the values shown online for my brokerage accounts. No need to track shares or reinvested dividends. The current value reflects all that.

Meanwhile, I turn to Morningstar to get the data for what portion of my funds is in each asset class. For instance, Fidelity 2035 was recently 31% in foreign stocks, so I create the appropriate calculation in the relevant cell, as shown in the sample table.

Of course, tracking trades and new contributions adds a wrinkle to all this. It isn’t all that difficult, but I won’t bore you with the details. As you can see at the bottom of Column H, I make a note of the last investment contribution I’ve made.

My spreadsheet probably wouldn’t pass muster with a trained financial analyst, but it works for me. Could it work for you?

William Ehart is a journalist in the Washington, D.C., area. In his spare time, he enjoys writing for beginning and intermediate investors on why they should invest and how simple it can be, despite all the financial noise. Follow Bill on Twitter @BillEhart and check out his earlier articles.

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Harold Tynes
Harold Tynes
9 months ago

This is a great way to look at your investments. I’ve done business with Fidelity for years and they do the performance to benchmark and asset allocation analysis for me with a push of a button. I can chose which of my accounts to include or exclude and what time periods.

Roboticus Aquarius
Roboticus Aquarius
9 months ago

Excel is great for this purpose.

I have not tried to track asset allocation over time – if I were starting over I’d include a regular record. What is in my spreadsheet, among other things:

  • Each fund as a % of the portfolio (for planning: it’s online, too.)
  • Annual Returns for each acct (401K, TIRA, Roth IRA, etc) & in Ttl
  • CAGR for 1/3/5/10/25 past years.
  • Retirement Savings by account, chart and graph.
  • Summary of Net Worth: Retirement Assets, Real Estate, Bank Accounts, Debt, chart and graph.
  • Retirement Savings both as a function of income and expected expenses (5x income and 8x expenses, for example)
  • PV funding ratio targets (i.e. if I were to convert everything to annuities
  • A compare to Millionaire Next Door UAW/AAW/PAW measure (mostly out of curiosity)
  • A graph that plots how much I need to retire (which declines with age) with how much I have saved (increases with age). Where the two lines meet is my projected retirement age.
  • A few alternate approaches to estimating retirement age to supplement the graph above.

Mostly, this was all about following my progress w/r/t financial rules of thumb to understand if I was on track for retirement. I found that if I’m ok per one rule of thumb I’m mostly ok per the rest, though I learned things from doing it. I also have a cash flow projection that I can adapt and run “what if?” scenarios, but every tool has limitations, and on-line tools are also helpful.

9 months ago

This column is in my top-ten for HumbleDollar. That’s because it gives guidance that’s easy to try AND it tells why it’s worth the effort.

In particular:
Take a look at the yellow-colored cells in Mr. Ehart’s example. For people who periodically do their own rebalancing, it’s awesome to have a tool for comparing a target percentage for each sector against the current (actual) percentage. A tool like this makes rebalancing decisions less emotion-based.

Easy enough to try it out. It’s merely a spreadsheet.

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