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I've recently decided I wanted to track my investments over time so that I could accurately determine really cool financial things like:

  • My actual asset allocation
  • My actual rate of return over time

I had a couple goals for doing this:

  1. If I know my CURRENT asset allocation, I can determine what steps I need to take (buy mutual fund X and sell mutual fund Y) in order to achieve my TARGET asset allocation. The importance of this can be found by googling The importance of asset allocation
  2. I'd like to see which mutual funds are ACTUALLY giving me the highest returns. This helps me provide a feedback loop to myself to determine

The challenges in doing this:

  1. In short, I have multiple investments. Between Roth IRA's, Rollover IRA's, 401k's, and individual stock purchases I've made, it could be a nightmare to maintain this if I didn't use a good application or spreadsheet.
  2. I dollar cost averaged some of my investments. That means some of my investments were buying $X (e.g. $200 per month) of a stock or mutual fund. I really didn't want to manually enter trades for the following example: I made monthly purchases over 18 months (18 transactions) for 3 different mutual funds ( 54 transactions) with a fixed price of purchase but a varying number of shares purchased. This is just one example, there are many transactions like this (I invest in my 401k every month too, I'm betting you do too?)
  3. I often reinvested dividends. Again, I really didn't want to manually enter the repurchase of dividends of some variable amount of money that bought X amount of stock every 3 months for so many different funds.

So, overall, the question is: how do I solve this complex challenges ensuring I dont enter tedious, error prone data, while saving myself the most time possible?

Note: I did find a program that I think does a great job of dealing with this situation, but I honestly would love other people's opinions on the matter to see if there are better solutions out there.

Another Note/Clarification - does anyone know how this program compares to Quicken?

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Related question but focus on open source. The features seem to exist but have to throw some code to merge the projects, luckily a lot of GPLed code. –  user1770 Mar 31 '11 at 13:28
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2 Answers

I found that an application already exists which does virtually everything I want to do with a reasonable interface. Its called My Personal Index.

It has allowed me to look at my asset allocation all in one place. I'll have to enter:

  1. Mutual fund or stock ticker
  2. Either the number of shares purchased or the amount of $ used to purchase shares (awesome) as well as the date of the purchase. The purchase price was optional as it can automatically be pulled from an internet database like Yahoo Finance.

The features which solve my problems above include:

  1. An option to select "Automatic reinvestment of dividends" which automatically determines the dividend amount and purchases more stock for you at that price.
  2. Determination of today's value of the investment based on queries to Yahoo's
  3. Ability to easily enter the asset allocation of a stock or mutual fund, including partial asset allocation (e.g. 50% large cap value, 50% mid cap blend)

Note - This is related to an earlier post I made regarding dollar cost averaging and determining rate of returns. (I finally got off my duff and did something about it)

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That software seems to do everything I need. I looked for a web-based tool that offered similar functionality but could not find one (all transactions had to be entered manually for the ones I found). I wish there was an online tool since I check my investments at work at lunch and at home. Good find though. –  Muro Jan 6 '11 at 3:54
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@Muro - I decided to "try out" quicken but so far I've seen 2 disadvantages: 1) vanguard only allows you to import up to 18 months worth of historical transactions (ugh) and 2) another poster mentioned in the following link, after 2 years of using the software importing transactions is disabled money.stackexchange.com/questions/3070/… –  CrimsonX Jan 6 '11 at 15:20
    
the closed blob seems really suck, I don't want to get into situation which I cannot control myself with my personal financial issues. Anyone using this [1] and CrimsonX`s suggestion as a replacement for Quicken? [1] gnucash.org –  user1770 Mar 31 '11 at 13:06
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up vote 1 down vote accepted

I want to mention I've found 2 options for more powerful tools that can be used to manage asset allocation:

  1. Vanguard's Portfolio Watch tool
  2. Morningstar's Instant X-ray

Advantages/Disadvantages:

Vanguard

  1. +ve Vanguards's tool is free with a Vanguard account, and automatically tracks your Vanguard investments.
  2. +ve Vanguard's tool can add external accounts (e.g. if you have another 401k somewhere else, you can manually add the symbols for that tool and it breaks down those investments into their asset categories)
  3. -ve Vanguard's tool has been criticized as being inaccurate on some forums, like The posts referenced in this Bogleheads wiki

Morningstar X-ray

  1. +ve It is rumored to be more accurate than Vanguard's performance. See a link to it here
  2. -ve in order to save results, you have to pay some $195/year for Morningstar's investment service.

I hope this helps others struggling with asset allocation.

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