Chart Talk

The Portfolio Toolkit Is Ready for Any Data Challenge

Updates, Chart Talk

One of the most rewarding things about working on Portfolio Charts over the years is how it has kept me on my creative toes. While building a few spreadsheets to answer my own financial questions is certainly a great motivator, designing them in such a way that anyone around the world can also put them to productive use is quite the challenge. That process of picturing your own ideas through outside eyes is educational in its own way and often exposes opportunities for improvement. So designing for both yourself and for others is a mutually beneficial exercise that’s hard to beat for progressive innovation.

I’ve been tinkering within that cycle a lot lately. It started with a simple cleanup of my own data collection that I use to power the site, which was admittedly rather complicated with several different spreadsheets that I used to pull everything together. After creating a brand new system from scratch, I was so happy with the results that I realized others might find it similarly useful.

Fast forward several months and more revisions than I care to count, and I’m excited to announce a very cool new product offering — the Portfolio Charts Toolkit.

Continue reading →

The Right Savings Rate Will Conquer Any Bear Market

Beginner, Chart Talk, Goals, Theory

One of the things I like about the safe withdrawal rate is that it’s a rare financial metric that accounts for the worst case. While everyone else was comparing withdrawals to average returns, William Bengen had the foresight to study every investing period he could find and determine the maximum amount of money that a retiree could have safely withdrawn over 30 years even in the worst possible timeframe to retire. By flipping the problem from an exercise in chasing ever-shifting averages to studying worst-case scenarios, Bengen’s safe withdrawal rate really did make life after accumulation a lot safer for retirees.

Look at the title image of a pair of grain silos and imagine your comfort level with them filled with just enough grain to barely make it through an average year. Now picture them with enough grain to survive the worst famine on record. That’s a huge difference, and Bengen’s new perspective completely changed the way people think about retirement.

As helpful as that is, however, not everybody is in the phase of career and life where retirement is an impending concern. But I still find the approach enlightening, so let’s expand our thinking. Have you ever wondered what a similar metric might look like for accumulators seeking to guarantee long-term success in uncertain markets? Put another way, what percentage of your crop must you save in those silos every year in order to fill them by a certain date? And if the stored grain grows and shrinks on its own like money invested in stocks and bonds, how would that affect the results?

If that type of question feels as interesting to you as it does to me, this article is for you.

Continue reading →
close up photo of water drop

Measure the Expense Ratio to Maximize Your Leaky Portfolio

Chart Talk, Updates

Drip. Drip. Drip.

Do you hear that?

No, it’s not the old bathroom faucet driving you crazy by breaking the nighttime silence. If only it was that simple! One inexpensive gasket would fix that right up, but this is something much more insidious.

Drip. Drip. Drip.

It’s the sound of your portfolio leaking thousands of dollars a year.

Continue reading →

Find the Right Funds to Build a Great Portfolio

Beginner, Chart Talk, Theory

When looking for opportunities to make new connections, there’s something to be said for looking like you know what you’re doing. One time when I was browsing the produce section of the local grocery store for a few peaches to add to the basket, a young kid sheepishly approached and asked for some friendly advice.

“Could you please explain how to find a good peach? I’m supposed to get some but have no idea what to look for.”

Now I realize people strike up random conversations at the store for all sorts of reasons, but I could tell he was out of his element. I got the impression he was under orders to bring home a certain list of items and was truly lacking the knowledge to do it correctly, and I was particularly impressed that he took the initiative to ask for help. I’m no chef by any means, but I was happy to offer my own experience of selecting them by feel and smell and letting any peach that is a little hard ripen for a few days before eating. With a few nice ones in-hand, we went our separate ways to enjoy a future sunny afternoon with a really tasty fruit.

Thinking back on that experience, I’ve always been keenly aware of how important it is to not only suggest an idea but to also offer enough information to make it actionable. So many financial voices lecture about investing concepts only to stop at the theoretical stage without bridging the gap to how normal people can act on those ideas. Sometimes it’s out of self-interest when their end goal is to drive readers to hire them for their financial services. Occasionally you run across a noble but detached research type who revels in unraveling the data but never actually makes the connection to anything that applies in the real world. And of course some people just like to talk without always fully understanding what they’re talking about. But regardless of the motivation, truly helping people is about so much more than simply convincing them that they should buy peaches without explaining how to actually do it. You have to take that next step.

In that same practical spirit, I’m really excited to share a new tool that I’ve been working on for a long time. If you’ve ever explored Portfolio Charts and found an asset allocation that looks perfect for you but struggled to figure out how to act on that knowledge, I now have just the thing to help. I call it the Fund Finder.

Continue reading →

Your Favorite Portfolio Is a Few Easy Clicks Away

Chart Talk, Updates

Like many areas of study with reams of background knowledge, one of the challenges of learning about engineering is the sheer number of books required. And we’re not just talking about small paperbacks telling straightforward linear stories, but massive volumes of technical data where the chapters are often referenced out of order based on the research subject of the day. Even when you eventually identify what you’re looking for, it’s really easy to forget where you found it or have a tough time explaining to others how to compile the same information. So when you find a particularly useful page in the deep sea of options, nothing beats a good bookmark.

Bookmarks are super handy in portfolio research as well. Spend enough time searching for the perfect combination of assets to meet your needs, and you’re bound to eventually find one that piques your interest. Rather than diligently documenting and re-entering multi-asset portfolios by hand, wouldn’t it be nice to be able to save and share ideas as easily as referencing a bookmarked page?

That’s a question I’ve been thinking about for years, and I’m excited to announce that I finally have a working solution. It’s not a traditional bookmark in the physical or website sense, but in a way it’s even more flexible. Portfolio Charts now features portfolio shortcodes!

Continue reading →

How To Build a Noise-Cancelling Portfolio

Chart Talk, Advanced, Theory

I’ve flown a lot over the years, and I understand first-hand how all of the little details like packing, efficiently getting through security, and getting settled on the plane become so routine for frequent travelers that they can do them without even thinking. But occasionally life throws you a curveball, just as it did on a recent flight where I was without my normal headphones. Stuck for several hours with nothing but the drone of the engines to keep me company, I can’t say I was thrilled but it turns out it was just the inspiration I needed to explain a complicated concept:

How do consistent portfolios full of volatile assets actually work?

Sure, I could go into a detailed discussion of covariance, standard deviations, and the complicated math behind efficient portfolio construction, but frankly I know I would quickly lose most people and even bore myself in the process. So inspired by the the desire for silence I normally take for granted, let’s step back and think of the problem a little differently in terms we can all relate to — noise.

Continue reading →

Every Portfolio Has a Tradeoff, but It’s Not as Clear-Cut as You Think

Chart Talk

Back in college my favorite engineering professor liked to repeat an adage that I bet everyone has heard at some point:

There’s no such thing as a free lunch

I believe the first time I heard that phrase it was in reference to a literal gathering where they were enticing students with free pizza, and my professor astutely noted that, make no mistake, you were going to pay for it in some way. Nothing is ever truly free, and there was bound to be a call for your time or money as part of the deal. Of course he was right, as the string attached to that pizza was an eye-rolling sales pitch I really could have done without.

Continue reading →

When Aiming for a Target Consider the Accuracy of the Weapon

Chart Talk, Goals, Theory

When discussing investing options, the single most common referenced metric has got to be the average return. Reams of books and blogs have been written on individual asset classes and composite portfolios with the highest average returns looking both backward and forward, and amateur and professional investors alike spend more time than they probably want to admit thinking about how to maximize their own average return. Long-term averages are both set on a pedestal and also taken for granted, as many people idolize the average to the point where they’re willing to ignore very real risks under the belief that superior performance is inevitable if they only wait long enough.

But what happens when the long-term average return never manifests in your own portfolio even over extended timeframes? Was the data wrong? Did the markets change?

In reality, it’s most likely none of the above.

Continue reading →

Study the Portfolio Rankings to Find an Investing Winner

Chart Talk

Traditionally the week before the New Year is the time when most blogs reflect on the past or ponder the future, but like the excited kid who just can’t wait to blurt out what he got you for Christmas I’ve got something special I really want to share. Between the turbulent financial markets that seem to have many investors questioning their portfolios, some fun tools that I’ve been tinkering with to help, and the college football bowl season that has me in the competitive spirit, there’s no time like the present to share one last holiday gift. So let’s save the melancholy contemplation and snarky lists for another day and have a little fun with some really interesting financial data.

Who is up for a good old-fashioned portfolio competition?

Continue reading →

Unpack Financial Haystacks With The Updated Portfolio Finder

Advanced, Chart Talk, Theory, Updates

Asset allocation is a obviously passion of mine, and I’m always excited when I find a new metric to tinker with.  These new ideas are not only interesting in their own right, but they also allow me to go back and refine some older tools to make them even better.  And it’s hard to think of a more appropriate place to start than one of my personal favorites — the Portfolio Finder.

Continue reading →