What to Look for in Investment Tracking Software
Prudent investors keep an eye on their money and ensure they’re sticking to their plan for the future. Whether you primarily manage your own investments or work with a professional money manager, the right investment tracking software can make this an easy task.
But there are dozens of options to choose from, each with its benefits and drawbacks. Here are a few of the features you should look for before signing up for portfolio tracking software.
It Easily Connects to Your Other Accounts
Gone are the days of having to check stock prices and manually updating your spreadsheet. Most modern investment tracking tools let you link your brokerage, retirement, and bank accounts.
Once they’re connected, you may be able to sync your accounts and the tracking software can pull in all your latest transactions along with current market prices. It can then give you an overview of all accounts and holdings—one of the greatest benefits of using software to help you track your savings and investments.
However, the syncing and connection options can vary depending on both the tracking software and other companies’ policies or capabilities.
If you can’t connect and sync accounts, you may need to manually update your balances and positions. Fortunately, even that process is simpler today than it’s been in the past. Sometimes, you can easily do this by downloading your account statements or records and then uploading them to your investment tracking software.
There Are Built-In Calculators and Analysis
Maintaining an up-to-date overview of all your investments is one of the core ideas behind using portfolio tracking software. But your software should also help you better understand how your investments are performing.
Ideally, the software can automatically pull in current stock prices so you can quickly see your gains or losses over the time period of your choice (such as year-to-day, one year, five years, or since you first bought the investment). Taken to the next level, you may then be able to compare your performance to a target market benchmark. Or, your current asset allocation versus your ideal asset allocation.
These types of analysis can be particularly helpful if you actively manage your investments. However, even if you hire a professional to manage some of your money, you’ll want to consider your total portfolio when analyzing your asset allocation and rebalancing your investments.
Portfolio tracking software may also give you different insights into the fees you’re paying on your investments, which can have major impacts in the long run.
The U.S. Securities and Exchange Commission (SEC) updated its investor bulletin in June 2019 to show how a 0.75% change in annual fees could cost investors nearly $30,000 over a 20-year time horizon. Uncovering these fees and moving your investments to lower- or no-fee options could be well worth the time and effort.
It Helps You Plan for the Future
You can use some investment tracking software to go deep into stock and portfolio analysis, and that can certainly be helpful. However, for day-to-day use, you might want software that helps you understand your investments within the context of your overall financial situation.
The software might help you predict your income during retirement and show how increasing or decreasing your contributions can affect your retirement plans. It could also help you determine the impact of different hypotheticals, such as changing tax rates, inflation, or life events, on your major goals: retirement, college funds, or large purchases.
For more short-term tax planning, you’ll want to know your realized and unrealized gains for the year. If the software can show the tax implications of selling a position this year versus next year—you can also use that information as part of your end-of-year financial planning.
You Get Greater Insight and Control
Choosing investment tracking software comes down to your needs and comfort level with each option.
For many people, an online-based system that links accounts and provides an overview and analysis of their positions works well. But you might prefer a downloadable program that lets you upload account statements rather than having to share the login information for your various brokerage, investment, and bank accounts. There’s no right or wrong choice between the two—they both provide different types of value.
In the end, try to find an option that has the key features you want, gives you greater insight into your investments, and is easy for you to use.