What tools, methods and indicators should I use to analyze my investment portfolio?

February 8, 2013

Advisor answers

Allan Moskowitz

Allan Moskowitz

CFP®, AIF®

As you will see, there are a lot of different tools, methods and indicators to use and which can get quite complex. Investing is an art and a science and not an exact science. Much of investing is affected by sentiment and moods and expectations of the myriad of investors. It is quite a challenge, even for professionals at times to be able to analyze the situation and to determine how to invest portfolios for turbulent times. Time and cash-flow needs are probably the most important aspects to consider in help...

James Dowd

James Dowd

CPA, CFA

The first indicator is whether your portfolio is appropriately allocated given your needs and goals. If you have a return requirement of 5% but are allocated to 5 year treasuries, your portfolio is built for disappointment, not success. In the same vein, if your principal investment objective is to preserve your nominal capital, then risk assets may not belong in the portfolio.

Some questions you should ask yourself include: what is my return objective? What is the time horizon for my investments? Wh...

The first level of vigilance is to understand your investment manager's investment philosophy and implementation strategy. What are the manager's priorities and view of what creates added value to his/her services. What to look for:

1. Keeping fees low both on investment vehicles as well as the advisor's fee.

2. Fee only advisor. Incentives play a big role in advisor behavior as well as client behavior.

3. Passive index investing using asset allocation tends to have the lowest expenses and generally st...

And one other "tool" you should never forget to use...your common sense...especially when it comes to diversification. If all of your investments are moving up and down together, you are probably not as diversified as you should be. If everything in your portfolio lost value in 2008, you are definately not as diversified as you should be. True diversification means having investments in your portfolio that have a good chance of "zigging" when everything else is "zagging" so to speak. Happy to discuss in more depth wi...

Craig Allen

Craig Allen

CIMA, CFP®, CFA

There are a variety of tools available on the internet, including yahoo finance, google finance, and many broker-specific platforms, such as Fidelity, Schwab, e-trade, and many others. The key to selecting the most appropriate for your portfolio is to first identify what your investment goals are for your portfolio. Matching your financial goals to your investments is critical to successfully meeting those goals over time. Once you have a congruent investment philosophy, meaning your investment are appropriate given your l...

Guy Baker

Guy Baker

AEP, CFP®, CLU, ChFC

We have found the most important thing to do is understand the amount of risk you have purchased in your portfolio. This is done by measuring the variance of returns from the average return over many years (called standard deviation).

Unfortunately, this requires some pretty sophisticated measurements. Morningstar provides the basic data to do this if you are interested in doing it. You can also obtain most of the data from Yahoo Finance.

The key is to determine the asset allocation percentages in your portfolio and then calculate the e...