Use Morningstar.com's Instant X-Ray instead. Simply enter the tickers of all of your investments and how much you have invested in each, either in dollar or percentage terms. Then click "Show Instant X-Ray."
You'll discover your portfolio's asset mix, style-box breakdown, sector weightings, regional exposure, and much more. Then, for ongoing monitoring, just click to save your Instant X-Ray holdings as a Portfolio on Morningstar.com.
Make your portfolio fit your pattern
Now that you know what you have, it's time to find out whether your current portfolio fits your pattern.
Begin by checking your portfolio's asset allocation. If that doesn't match your pattern, shift assets among funds and stocks to tailor the mix. If your investments are in taxable accounts, however, you might not want to sell any of them--the tax repercussions could be enormous. We'll talk about sell strategies in Portfolio 304.
Next, weed out redundant investments. If you have three large-cap growth funds, for example, they probably aren't all equally good. Refer to Morningstar.com's Fund Reports to see which fund has the best category ratings and lowest expenses. Morningstar.com Premium Members can also read the Morningstar Analysis for insight into the funds' strengths and weaknesses.
Be sure that your portfolio includes core holdings, those investments on which you're relying most to help you meet your goals. Core investments should be the biggest part of your portfolio. We'll discuss how to choose them in Portfolio 106.
Finally, fill any portfolio holes, such as a lack of value or foreign exposure, with new investments.
Schedule a time to rebalance
By following the first three steps, you've tailored a portfolio that suits you to a T. You'll want to make sure that it continues to fit, though. That requires occasionally rebalancing, or restoring the original pattern. We'll cover the ins and outs of this in course Portfolio 305.
Stocks often gain more than bonds or cash. As a result, stocks will probably take up more of your portfolio over time than in your original pattern. Because stocks are riskier investments than bonds, your portfolio is becoming riskier as your stock position rises. That's why it's important to rebalance and restore your portfolio to its original pattern.
Similarly, not all stocks do well at the same time. Maybe your value stocks are outpacing your growth investments. If you don't restore your portfolio's original balance between the two styles, your investment success will become increasingly dependent on your value investments.
When you rebalance, keep your goal in mind. As you get closer to needing the money you've invested, the pattern you originally drew should change. Your portfolio should become more conservative as you approach your goal.
Monitor your investments
In addition to rebalancing your portfolio, you'll want to keep tabs on your individual investments. You need to make sure they're still filling their original roles in your portfolio.
Let's say you're monitoring your mutual funds. What types of things should you look for? Make sure your funds stay in the same Morningstar category; if a fund's style has changed dramatically, the fund may no longer meet your needs. Examine the fund's category rating. Is it still competitive? Watch out for manager changes, too.
With stocks, you'll want to keep tabs on price, and where that price is relative to the sell target you've established. Changes at the top also matter, as new management can mean a new strategy. Profitability, financial health and growth prospects are likewise important. Profitability, financial health, and growth prospects all matter, too.
We'll discuss these and other portfolio-monitoring issues at length in Portfolio 301 and 302.
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[BRIEFING.COM] Two hours into the session, the major averages are holding their recent levels with the Nasdaq (+0.3%) leading while the S&P 500 (+0.1%) sports a two-point gain.
Individual sectors trade in mixed fashion with technology (+0.5%), health care (+0.4%) and consumer discretionary (+0.2%) setting the pace while energy (-0.2%), financials (-0.2%), and materials (-0.1%) lag.
Today's leading sector, technology, is receiving considerable support from its top component, ... More
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