Good returns start with quality, independent information

by Doug Morris, CEO, Sharesight | Aug 27th 2021

Convincing investors of all experience levels of the merits of a dedicated portfolio tracking solution is a fundamental challenge for us at Sharesight. We chat with many investors with decades of experience who can’t quite press delete on their macro-intensive spreadsheets; yet we are also faced with a staggering amount of new DIY investors who aren’t fully aware of the work required to properly record and track their investments.

Regardless of experience level, all investors face the same problem: they need to know how their portfolio is actually performing (not just price movements and basic capital gains information); and without the right portfolio tracking solution, they end up wasting their precious time on tedious portfolio admin, leaving them less time to spend on their actual investments.

Good returns

Why is it so hard to find high quality portfolio solutions?

First of all, let’s discuss some of the most common "portfolio tracking" solutions available to investors, and how they fall short.

It should be noted that building a portfolio "management solution" as opposed to a mere “tracker” is hard, expensive, and requires a fundamental dedication to independent investing. Nearly every solution out there is designed as a strategy to monetise your personal data, to grab your email to sell you investment products, or as a stock price widget. Most solutions can’t help but to tell you what stock to buy next, either.

Unfortunately for us self-directed investors, real-time access to objective, factual and personalised performance data is sometimes at odds with the financial providers we depend on – even if they can provide something that looks and feels similar. For example, the brokers we rely on have done well to build slick interfaces and mobile apps to encourage us to trade more. This is their revenue model and they have little incentive to aggregate financial data from their competitors, let alone put their name on top of a comprehensive tax report.

Even if we do turn some of our portfolio over to a professional at an institution, the platforms or wrap account reports that we receive are only as good as the investments that they’ve put you in. And those investments were picked from a narrow menu of approved products that was based on an agreement with the advice firm and the investment manager without your needs in mind. The irony here is that these platforms could provide great reporting but that might put their own services at risk.

It’s about you, the independent investor, and your money

The best solutions tend to be built by the people who "live the problem." After all, Sharesight was originally a family business, built by an accountant-turned-investor and his son. Twelve years later, our business is backed by customers who loved the solution so much, they invested in the company. Their feedback, and the feedback from our users, help shape our product roadmap.

Fundamentally, one of our core deliverables is distilling a lot of information from multiple sources down into actionable, standardised insights. Data sets on companies and share prices are a commodity these days, but a personalised rate of return is elusive.

A good example of this is our money-weighted, annualised return methodology. The financial headlines may be awash with eye-popping stats about tech company share prices, and index "returns", but all of this is obtuse and merely directional. What matters is your financial experience with your investments – when you entered, exited, and the fees you paid to do so. As human beings we live our lives in annual chunks, creating yearly budgets and paying our taxes and school fees annually. It only makes sense that we think of our portfolios in the same way. After all, a 10% return over 10 years and a 10% return over one year are two very different outcomes.

You can also put these returns into context with our benchmarking feature, which lets you compare your portfolio to the broader market by tracking it against a realistic investment alternative (such as an ETF or index fund). This is especially relevant in volatile markets where you need to know if your lacklustre performance is simply due to the prevailing market conditions, or your own investment choices, for example. Ideally, you will discover that you are outperforming, or at least matching, the market on an annual basis – inclusive of capital gains, dividends, brokerage fees and foreign currency. But if you find yourself underperforming compared to the benchmark, you can make an informed decision to change your investment strategy or even re-allocate your money into the ETF or fund in question.

These are just some examples of how investors can benefit from using a portfolio tracking solution built for the needs of independent investors, such as Sharesight. There is a lot of noise in the investment industry, and it can be hard to decide where to turn or who to trust. But one thing you can always trust is a solution that provides access to quality, independent information and actionable insights – not the latest investing craze or vague, generalised stock data. And if it automates your portfolio admin for you, that’s even better.

Start tracking your investments with Sharesight

If you're not already using Sharesight, what are you waiting for? Thousands of self-directed investors like you are using Sharesight to track their portfolio performance and save time and money at tax time. Sign up for a free Sharesight account and start tracking your investments today.

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