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Diversification: everybody agrees it's a good thing. Don't put all your eggs in one basket. Spread them around.
But if you do that - practically speaking, if you don't keep all your investments with one company like Fidelity or Vanguard, but spread them across many companies (see annual investment research findings here to get an idea of your range of choices) - you need to create your own dashboard that shows, real time, how your whole portfolio is doing.
You can't rely on the statements you get from each company because they're all formatted differently, they only show the pieces of your puzzle that they know about, and they have a tendency to overstate basis and understate returns because of how the I.R.S. deals with reinvested gains. They generate documents to help you do, and minimize, your taxes.
But if you're a goal-oriented investor with a clear preconceived idea of the return on investment you need and want, (like we do in our Lifetime Savings Plans) you need an apples-to-apples comparison of your desired versus actual returns. If you rely on the return figures you get from investment houses that are set up to produce year-end tax documents, while you may pay less taxes, you won't get that comparison - a comparison that is vital for making sound investment decisions.
A variety of tools exists to create that dashboard. From 2006 to 2017 Google provided one that was pretty cool, but as of November 30, 2017, those days are over.
But fear not. The Morningstar Portfolio Manager works just as well, if not better.
However, setting it up right and maintaining it takes some doing. If you'd like some help, contact us.
But if you do that - practically speaking, if you don't keep all your investments with one company like Fidelity or Vanguard, but spread them across many companies (see annual investment research findings here to get an idea of your range of choices) - you need to create your own dashboard that shows, real time, how your whole portfolio is doing.
You can't rely on the statements you get from each company because they're all formatted differently, they only show the pieces of your puzzle that they know about, and they have a tendency to overstate basis and understate returns because of how the I.R.S. deals with reinvested gains. They generate documents to help you do, and minimize, your taxes.
But if you're a goal-oriented investor with a clear preconceived idea of the return on investment you need and want, (like we do in our Lifetime Savings Plans) you need an apples-to-apples comparison of your desired versus actual returns. If you rely on the return figures you get from investment houses that are set up to produce year-end tax documents, while you may pay less taxes, you won't get that comparison - a comparison that is vital for making sound investment decisions.
A variety of tools exists to create that dashboard. From 2006 to 2017 Google provided one that was pretty cool, but as of November 30, 2017, those days are over.
But fear not. The Morningstar Portfolio Manager works just as well, if not better.
However, setting it up right and maintaining it takes some doing. If you'd like some help, contact us.