Empirical studies show that most investors underperform or even lose money. In a majority of cases, underperformance can be linked to insufficient portfolio tracking. Simply put, investors fail to stay on top of their portfolios. Risk tolerance levels are exceeded, bad apples stay in the portfolio and portfolios cease to be properly diversified.
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The tragedy in this that with the right tools and insights, private investors could do so much better. In this article we will explain how you can track your portfolio better, find shortcomings and ultimately improve your long-term investing return.
The dashboard
Most investors have portfolios with 10 or more holdings, especially since fractional share ownership has become a thing. These portfolios are dynamic. The respective weight of your individual holdings will change, even if you were not to trade at all. Most portfolios will also see new holdings being added and positions being sold. Finally, many of us have several investment portfolios when you add up brokerage and retirement accounts. So how to keep up without quitting your day job?
The solution is to find the best dashboard for your portfolio. Chances are your broker will not provide you with a great dashboard. This is unsurprising, they are focused on getting you to transact. Ziggma’s portfolio dashboard lets you track a series of key portfolio metrics that every long-term investor should stay on top of.
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Track portfolio metrics through time
Naturally, every investor keeps a keen eye on performance. But, many times, performance fails to keep up with expectations, leaving investors puzzled and discouraged. Fortunately, investors can improve their long-term investment results considerably when tracking key portfolio metrics over time to make sure they always own the best possible portfolio.
Ask yourself these questions:
- Has the portfolio quality of my stock holdings deteriorated?
- Did I keep portfolio risk in check?
- Am I properly diversified?
Ziggma lets you track these metrics over time through charts that are integrated into the dashboard. Through this insight you can identify the reason for underperformance and make the appropriate changes.
The following chart shows how you can track your portfolio’s beta risk factor through time to make sure your portfolio risk remains in line with your risk tolerance at all times.
Monitoring portfolio diversification
Ironically, the best-known principle in long-term investing is all too often forgotten over time. It’s not entirely surprising. Tracking your maximum exposure to a single stock or industry is time-consuming without an alert tool to help you. As mentioned above, portfolios are dynamic. This means you have to frequently log into your account to make sure no single stock makes up too large a share of your portfolio.
Ziggma has designed an easy-to-use tool to solve this problem for you. It makes portfolio monitoring a piece of cake. All you must do is set a smart alert on a sliding scale defining your maximum exposure threshold, for example for a single stock or industry. From there, we will take over diversification monitoring for you and alert you when the threshold is reached.
Risk managed – Time saved – Peace of mind.
Better portfolio tracking will lead to higher returns
It’s really quite simple. To reach your investment objectives, your goal must be to own the best possible portfolio, at all times. And there’s only one way to know whether your portfolio is staying on course: through proper portfolio tracking.
So make sure how get yourself the best portfolio tracking tools for your portfolio.
We believe Ziggma is the best option on the market. But you be the judge, start a free trial!