Tools

Find the Right Funds to Build a Great Portfolio

Beginner, Tools

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.

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Your Favorite Portfolio Is a Few Easy Clicks Away

Tools, 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!

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How To Build a Noise-Cancelling Portfolio

Advanced, Featured, Tools

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.

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

Tools

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.

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When Aiming for a Target Consider the Accuracy of the Weapon

Goals, Tools

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.

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Study the Portfolio Rankings to Find an Investing Winner

Tools

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?

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Unpack Financial Haystacks With The Updated Portfolio Finder

Advanced, Tools, 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.

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How To Predict Withdrawal Rates Without A Crystal Ball

Advanced, Retirement, Tools

I’m always on the lookout for ways to improve the tools on Portfolio Charts, and Siamond really came through with his latest update to the Simba spreadsheet.  Buried in the heaps of interesting returns data is something really cool — direct calculations for safe and perpetual spending rates for a given investing period.  Based on an equation from a Morningstar white paper, they are particularly elegant compared to my old method and allow me to significantly improve the speed and stability of the Withdrawal Rates calculator.  And by doing so they open up a great deal of additional data that was previously too laborious to manage.

Well I’m a sucker for new data, and in the process of updating the calculator mechanics behind the scenes I took the opportunity to revisit an old question I’ve been wrestling with for a while.

 

How do you calculate a 40-year withdrawal rate when the worst start date for a particular portfolio was less than 40 years ago?

 

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Discover Something New With The Updated Portfolio Finder

Tools

When I was younger, I really enjoyed visiting my local used record store.  There was always something cool about walking into a sea of thousands of amazing albums I had never heard before and looking for something new and enjoyable.  Sometimes you’d hit it big and sometimes you’d run across something really weird, bit it was always a fun experience.

But strangely enough, I very rarely walked out with a purchased album.  Sure there was more great music there than I would ever be able to listen to in my lifetime, but in a way it ended up causing more problems than it solved.  You see, I’d have to take the time to listen to all of those albums in the store to know which ones were truly my taste, and frankly that was a lot of effort.  So I’d usually ultimately go on a friend’s recommendation rather than truly explore for myself.

People used to wonder back then how a relatively expensive music download service would ever take off when there were cheaper local options like my used record store.  But to me the most revolutionary new feature was not the “purchase” button, but the “search” box coupled with previews.  With an entire catalog available at the click of a button, good music was easier than ever to discover.  In my opinion breaking that barrier between the massive sea of music options and the ease of finding the right music for you was the key in driving the entire industry forward.  It’s about connecting people to artists.

I’ve applied a lot of that experience to Portfolio Charts, and it’s probably why the single tool I’ve spent the most time on is the Portfolio Finder.  If the Portfolios section is about showcasing the most popular albums, the Portfolio Finder is the app that lets you dig through the ocean of undiscovered talent for something truly original.  It’s been an ongoing project, and today I’m happy to announce the next iteration that should make it easier than ever to discover a portfolio idea to meet your personal investing goals.

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