Tuesday, June 17, 2014

Portfolio and Networth Updating - Should I start, and how?

After seeing so many people update their portfolios and networth for the month of May ending, I really feel like doing it too, but I am quite embarrassed that a huge portion of my allocation is in unit trusts with higher expense ratios.

I am thinking how I would like to show my portfolio. I'm still not sure how I would like to present the information, so let's look at some bloggers:

15HWW does it on an income basis, which I think is fantastic, because it is so easy to see what the year's income from his investments would be. He lists on current market valuation price and expected dividends for the year. With a portfolio of $221,594. he is generating $7341.45 a year, which works out to be a yield of 3.3%. I think his inclusion of his CIMB Star Saver

Dividend Warrior presents his on cost basis per share, which means you can calculate the yield based on investment cost. He also adds in a portion for his unrealized portfolio gains, not per share. I think this is quite a good thing too, because it helps focus on the portfolio as a whole, which should be the emphasis. However, although it can be diversifying, it can also be detrimental that underperforming stocks on a total return basis might still be in the portfolio. With a portfolio of $212,390 he is expecting 6% yield of his portfolio's value, which is reflective to the higher yielding stocks in his portfolio.

STI StocksInfo runs a table with monthly performance, I think that is amazing information to have, especially if looking towards taking advantage of seasonality, but it does seem like an awful a lot of work. He does not list his portfolio amount, but rather the % of his portfolio in each asset. His focus is on total return and no income, so there is no mention of dividends.

PassiveIncomeFarmer list down his average cost and % allocation, includes dividends collected back into his cost to calculate breakeven and does not list either cost or market valuation. Therefore, you can actually work out his portfolio value and cost, though it is a slight amount of work. I did the math for you already, his portfolio is currently $131,395 and he states he earns an average dividend of $483.29 per month, which works out to be a portfolio yield of 4.4%. That looks quite accurate, given his mix of REITs and blue chips.

OneMillionDiary is one of the few people that updates his entire networth, not just his investment portfolio. He has BTO which will be finish being built in a few years time, and even counting the home loan on it, he has managed to achieve a networth of $100,000. I quite like how he presents his networth, I am actually doing something similar where I break up the holdings of my different savings account. He does not invest aggressively though, but he is a great saver.

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Even though all these people are different, varying with age, income, experience and objectives, I think one thing is very clear. All these people are patient, detailed people and fully aware of the whereabouts of their money.

I think one of the most major benefits of updating portfolio performance and net worth (a form of journaling) is that you get to see the gradual change and improvement to your financial well-being. There is a sense of accomplishment because the results are factual and tangible. Did you end off the month with more money than the start of the month? You did? Congratulations!

Once you start with that kind of accomplishments, you feel good about it and want to keep it up. This sort of "winning streak" mentality is an amazing encouragement factor that keeps people on track. Especially if you are looking from a longer time frame (a year, instead of a month), where time has smoothed out market volatility and you can see that increase.

I am now personally very inclined to mimic the layout and style of OneMillionDiary and create pages for my investment portfolio and my networth. I think this will help me be more focused to achieve my goals.

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