This is the ninth exercise in a series designed to walk you through an entire financial plan. The exercise is embedded in an Excel spreadsheet you can download and save for personal use. You can read the backdrop for the exercise HERE, or just jump right in with the instructions given below:
Most of the information you’ll need to complete this exercise should already be together from the Personal Balance Sheet exercise earlier in this series, but if not, pull together the most recent holdings information that you have for your various investment accounts. If you have online access to these accounts, it will be as easy as printing out the page with your current holdings. If not, pull together each of the most recent statements for all of your investment accounts.
Aggregate your holdings using the form we’ve made available for this exercise online. Segregate them between investments that are inside of retirement accounts (like your 401ks, 403bs, IRAs, etc.) and nonretirement accounts (there is a tab for each on the spreadsheet). For any mutual funds, you’ll want to have the name of the fund and the five-letter symbol.
Now, navigate your web browser to www.morningstar.com. With the tools here, you’ll be able to use that final column of your Investment Audit to fill in the Manager Category column. (You can examine your mutual fund managers with the tools on Morningstar using the basic service at no cost. Another good, free resource for the analysis of stocks and mutual funds is Yahoo’s Finance web site http://finance.yahoo.com/.)
Plug the symbol of each of your mutual funds into the “Quotes” field on Morningstar. The main page for each fund will show you a 10-year chart with a graphical depiction of your fund’s performance alongside its benchmark. Just below the chart, you’ll see a tool that will allow you to click and drag the timeline backwards to see a longer fund history if it’s
available. You can also hit the “Performance” tab and select the “Expanded View” to see even more detail about the fund’s numerical performance.
Using the tips in this post, you should now be able to classify each of your funds. In the Action column on the right hand side of the worksheet, check any of the Return Chasers and Index Huggers for additional review. Again, Return Chasers should be well understood, carefully monitored, and dumped if misunderstood. Index Huggers should be replaced.
Click HERE to access the Mutual Fund Audit app!