How to Track Your Investments

June 9, 2011

Two key parts of investing are how much money you contribute and how your investments perform. Tracking that performance will show you how much more money you need to put in to to hit your investing goals. But how important is monitoring your investment performance? Should it be done on an annual, quarterly, monthly, or weekly basis? Or should you just leave well enough alone and just keep investing your funds periodically?

Why You Should Track Your Investments

There are two great reasons to keep tabs on your investments, keeping the right balance of investments in your portfolio and tracking progress towards your goals.

Know When to Rebalance

It’s recommended that you rebalance your investments at least once per year to keep your asset allocation in line with your investment risk profile. Take the mix of stocks and bonds in your portfolio for example. If your goal is to have 70% of your investments in stocks and 30% in bonds, it won’t exactly be that amount every day. If stocks skyrocket, your balance might swing to 77% stocks and 23% bonds. Rebalancing is selling off some of the stock investments and reinvesting the dollars into bond investments to get back to a 70%/30% mix. If you don’t monitor your investments, you won’t know how badly your investments need rebalancing.

Track Progress Towards Your Investing Goals

Without knowing how your investments are performing, how can you track your progress toward your retirement goal? If you have a great stretch of years with large growth in your investments that puts you ahead of your goals you might decide to invest some of your retirement savings in something other than the stock market. On the other hand, if your investments have poor performance you might need to put more dollars in every year. If you aren’t tracking those investments you don’t know whether or not you need to adjust your investment strategy.

Why You Shouldn’t Monitor Your Investments

Keeping tabs on your investments is a great thing, but you can easily overdo it. Constantly monitoring your investments can be an emotional drain and can cause you to make rash decisions.

Emotional Reactions

The stock market and your portfolio are going to have regular ups and downs. Sometimes severe ups and downs. The worst thing you can do when your portfolio takes a serious change is to panic. If you are constantly monitoring your investments you are more apt to try and make constant changes. You are better served to set a steady course and not panic when things change drastically overnight.

So we’ve looked at the good and bad implications of keeping regular tabs on your investments, now we’ll talk about a few different ways to track your investments.

Investment Brokerage Firm

The easiest way to monitor your investments is through your brokerage firm or mutual fund company.  Since they hold your investments this requires the least amount of setup, they have a record of what you own and report on it.  Some fund companies make tracking tools available even if you don’t hold investments through them – for example the T Rowe Price Portfolio Manager.

Whether through paper statements or online, you should be able to get access to your short and long term performance through your brokerage account. Online access is obviously easier, but you have to be careful that you don’t become obsessed with checking it every single day. One nice thing about keeping your paper statements is that you can sit down with 12 months or even several years of statements and look back at how your money has performed. 

You don’t actually gain or lose any money on an investment until you sell some shares and realize your profit or loss.  When you sell some of your investments you’ll need to know their cost basis come tax time so you can report it to the IRS.  Your investment company is the best place to get this information, starting this year brokerages are required to report cost basis to you and the IRS for any stocks you sell.  The following year they’ll have to report it for ETFs and mutual funds – the year after that for options.

Free Portfolio Tracking Sites

What if you aren’t using just one brokerage? What if you want to track your 401k, your Roth IRA, and an old 403b that you never rolled over? One brokerage firm may not be able to handle tracking investments you don’t have with them. Thankfully there are a wide array of free tools online where you can enter your portfolio positions and track them that way.

Of course the downside of this option is that you have to setup the account and enter all your investment information to get started.  Any new investments won’t be automatically added to be tracked, you’ll have to remember to enter those.

Many of the major financial publications offer some form of free portfolio tracking.  You can track your investments in varying degrees of detail on Kiplinger.com, SmartMoney.com,  Money.com, and Money.MSN.com. Both Google and Yahoo have finance sections where you can setup your portfolio and track it’s performance.

Something neat, but kind of spooky, I noticed about Google Finance – it remembers the ticker symbols you’ve looked up using the search engine and shows you the latest quotes for those stocks, mutual funds, or ETFs.

Two tracking services that are free but offer more functionality than the ones mentioned so far are Yodlee Moneycenter and Mint.com.

Premium Investing Websites

There are premium websites such as Morningstar where you can not only enter your investment positions and track them, but you’ll get overall advice on the quality of those investments. Morningstar rates mutual funds and individual stocks. You’ll be able to dig deep on the fundamentals of a company to decide whether or not it belongs in your portfolio.  

Investment Tracking Software

Although the web has made it easy to track your portfolio online and have investing data at your fingertips many people still like to use a basic spreadsheet to keep track of their investments.  Microsoft Excel actually has a whole library of financial formulas you can use if you want to run your own numbers on your investments.  (If you don’t want to pay for Excel you can use the spreadsheet in OpenOffice or use the free web-based spreadsheet  in Google Docs).

Intuit, who runs Mint.com, also has some popular personal finance software for the desktop you can use to track your investments.  While you can use Intuit’s QuickBooks to keep tabs on your investments most people are probably better off using Quicken.  Quicken is cheaper than QuickBooks and is geared more towards the average investor.

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Kevin

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Kevin
Kevin Mulligan is a debt reduction champion with a passion for teaching people how to budget and stay out of debt. He's building a personal finance freelance writing career and has written for RothIRA.com, Discover Bank, ING Direct, and many others.

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5 Responses to How to Track Your Investments

  • DIY Investor

    I like Schwab. There you can choose a model that fits your risk profile and then the system combines all of your accounts and shows how they are structured relative to the model. For example if the model calls for 15% low cap stocks, Schwab identifies your low cap holdings and shows the total % holding versus the target.
    Furthermore it calculates the total return of your accounts as well as the targeted benchmark portfolio over various time periods every day.
    Very convenient for rebalancing.

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