Tag Archives: allocation

How to understand the figures of my portfolio to obtain better results? (I)

It sounds very nice when you think that you have your own investment portfolio. It is an important step to improve your finances and get your goals. The question is that a portfolio has its own life since its inception and your responsibility as investor is guiding the portfolio to your interests. What are the signals that you have to follow?

Well, there are many figures and parameters to measure the quality of your portfolio, but we will select the main ones in order to get the most important data:

  • The performance evolution: the figure alone is not enough, because it has to be put in comparison to others. We recommend comparing it with the smart benchmark. This comparison provides the view to understand if we have chosen the right assets or not. For instance, this example shows that we are far from the benchmark and there is a wide improvement to manage.

portfolio performance in T-Advisor

  • The weight of the assets in your portfolio: it is also relevant to understand the allocation. If we have a concentration in a country or a sector, there is a high risk to suffer from instability, if the trend changes. Diversification reduces risks, but we can have some assets with lower returns. A good analysis can help us look for similar assets with better figures in order to rebalance the portfolio.

weight of assets in a portfolio

  • The relationship between performance and volatility: first of all, volatility does not mean necessarily more risky, as we have already commented. However, we can understand the connection between performance and volatility through the Sharpe ratio. This figure shows how profitable an investment is related to the historical volatility. The higher the ratio is, the better the investment is… but this idea is not totally right if we do not compare two assets. You can find two assets with similar ratios but with different figures. We have to look into the numbers to understand if it has a high performance with a high volatility.

Portfolio sharpe ratio

There are some other figures that we will soon comment.

Link a portfolio with a financial target in T-Advisor

We usually write about how to create a portfolio, how to manage it, where to invest or how to include changes in our investments. That’s fine, but we cannot forget that we build and manage a portfolio to reach a financial goal. It can be to buy a house or a car, to save for holidays or the studies of our children or just because we look for a higher return or diversifying our wealth.

T-Advisor last upload tries to cover that point. We have already written about our investment planner, but we missed in that moment a point in which we have work later: how to link that plan with your personal portfolios. You can do it now with a simple click. We explain it easily at the beginning of this video:

Video about linking portfolios and financial goals

A bar reports also if you are on track to reach the target. A relevant point is that you obtain a list of several figures about your goal and its balance. The system is also flexible, because it implements two tools:

  • An edition tool to change the portfolio linked with your goal at anytime.
  • A chart to compare your current portfolio allocation with the ideal portfolio allocation for your goal obtained in the planner.

Comparison of portfolio allocation in investment planner

Investments must have a meaning, because nobody invests for nothing. We all have dreams and aims to satisfy and they need money to be accomplished. Investment is a way, but smart investors need the right tools to obtain them successfully. T-Advisor has developed these tools to complete the global process, so that any individual can plan their goals and assign a strategy to achieve it. Now it is your time. What are you waiting for?