Investing

Managing Multiple Investment Accounts in Personal Capital and Rebalancing

by

TL;DR: I’ve found that tracking my investments over multiple accounts is easiest through the tool, Personal Capital. It is the best at keeping your account information up-to-date and has the fewest problems connecting to new accounts and staying connected as well as letting you specify assets in the account if it is not able to connect. It helps me in seeing my allocation in different sectors across my accounts and allows me to rebalance every 6 months with ease.

If you’re like me, and you have a diversified portfolio for retirement spread across two or more accounts, you’ve probably looked into different solutions to track performance across those accounts. Unfortunately, every solution that I’ve tried falls short in one area or another in providing a comprehensive picture of your overall financial health. However, the one tool that I have found the most useful is Personal Capital. I mainly look at the net worth graphs along with the investment graphs to determine my overall financial standing.

For investing, you can select Investing > Holdings and see how your portfolio compares to the S&P 500 index or the DOW. Switching time frames also shows the last 6 months, 1 year, etc. to show how it’s comparing to those over time. As long as my investments are equal to or greater than all of these indexes, I’m happy with my investment decisions.

I have about 90% of my accounts invested into index funds, and around 10% in individual stocks in the tech sector and that is reflected in the sector allocation graph. If you are unsure about what sectors your funds are in, you can easily see that with this tool. When I need to rebalance due to being too heavy in one sector, I go to whichever account those investments are in, calculate the % allocation that would bring me back into line with my investment targets every 6 months or so, then exchange the funds.

I’ve noticed a lot of talk about holding cash and waiting for a downturn in other investment blogs and podcasts, but ideally you would have an investment allocation that rarely is in cash so that your money is always gaining value and not losing value due to inflation or missing out on another bull market. If you want to take advantage of market upswings, and downturns, you just need to rebalance to do so. If you had a 20% allocation to bonds, and 80% in stocks, but then the stock market goes down by 10%+, you could re-allocate funds from bonds into stocks to get a discount on stock. However, the opposite is also true. If your stock goes up, your allocation into stock would be over 80%, so you could rebalance again, lock in profits from your stocks by selling out of those and buying more bonds to get that back up to 20% allocation. In this sense, you are keeping money aside in bonds instead of just cash and still hopefully keeping pace with inflation.

I also front-load my investments at the start of the year due to my employer doing a 50% match on all contributions that isn’t limited to a certain percent each paycheck. By front-loading my money is in the market longer and can compound more throughout the year while others dollar cost average instead. So in the first few months of the year my investments are really pushing my account balance up and after 6 months I rebalance depending on how those funds are doing. One thing you can do to also rebalance is to change your allocation in your investments throughout the year if you dollar cost average. If you’re like me and you front-load, you only really need to adjust your allocations a couple times a year in the funds you already have invested.

One thing I’ve noticed with looking at the net worth value, if you have your property included with the Zillow estimate it can really affect the value quite a bit depending on how your real estate market is doing. If selling your property and downsizing into a smaller house is not part of your retirement plan, you might want to skip adding your property to Personal Capital and just track your investments and other debt and cash accounts instead.

Hopefully this was insightful in how I use Personal Capital for investment tracking and rebalancing, and gives you some ideas in what you can do for your investing journey! If you want to try out Personal Capital, please use my referral link!

 

Minimizing Risk in Cryptocurrency Investments

by

TL;DR: Invest 1% or less of your portfolio in cryptocurrencies for the long term. Pull out your initial investment after it doubles and let your investment grow on the gains after that. Pull out some gains every 6 months or so to lock in profit for as long as the crypto market keeps going up. If you want to sign up for Coinbase, please use my referral link to get $10 USD in free Bitcoin after you invest $100 USD. I also get $10 in Bitcoin for referrals, so I appreciate it!

The first time I heard about cryptocurrencies was in 2013, when Bitcoin was much cheaper and mining it was still financially feasible to the masses. I had a co-worker that had invested a few hundred into it, and another co-worker a few thousand. I read about people mining it, but didn’t bother to research what that even meant at the time. It was considered to be too new, and not proven, so a high risk investment.

Fast forward to around June of 2017, the cryptocurrency market is much hotter, and is growing at an astounding rate. I talked with some of my co-workers again about it, and most of them were of the mindset that it was  still too risky of an investment due to its volatility day to day. Having a bit more investment research and knowledge than four years ago, I was able to see that the risk, if handled appropriately, was an acceptable one to take with a very small part of my portfolio. Below I will cover my strategy to cryptocurrency investment.

Measuring Risk

If you are planning to get into a high risk, high reward investment like cryptocurrencies, you want to test the waters a bit with a small percent of your portfolio that you are willing to lose and won’t affect your daily life. I took $900 that my spouse and I had agreed beforehand that I could use however I wanted in investments and invested it in a Coinbase account after researching the different exchanges and their pros/cons. The biggest selling point for me on Coinbase was that they were US based, and offered three of the top cryptocurrencies available, Bitcoin, Ethereum, and Litecoin. They also have one of the largest user bases of all exchanges for cryptos.

To mitigate my risk, I split my initial investment to $400 in Bitcoin, $100 in Ethereum, and $400 in Litecoin. My reasoning was that it takes a lot more growth and investment for Bitcoin to grow than it does for Litecoin, which was at a much lower price per coin. The fees in Coinbase are sometimes pretty high, but worth the cost with how much you can potentially gain investing in cryptos.

Setting Goals

My goal with my first investment was to test the exchange to see how it worked, as well as see if it was right for me before investing more. Verifying my identity on account creation took a little while to work out, but I got it to succeed after a few attempts. Buying directly from a bank checking account takes a week before your funds show up in Coinbase, but the purchase of your cryptos goes through at the price you place the order at. This means, that you can’t sell what you purchased for at least a week. Since my goal was to invest for the long term, this wasn’t a problem. If you want to day trade and try to time the market buying low and selling high, then I’d suggest you transfer the funds to your account first before trading. As my account grows or shrinks, I would periodically rebalance the account to make sure that I wasn’t too overweight in one cryptocurrency.

Collecting Reward

Three weeks after my initial investment, Litecoin tripled in value. I now had an account that had $1,200 in Litecoin. At this point, if this were all I wanted to invest in cryptos, I would have pulled out my initial $900, and let the profits ride. However, now that I had proven that my investments could make money, and that Coinbase was reliable enough for longer term investments, I decided to put the remainder of my higher risk funds into the account. After seeing Ethereum rise up over 60% since my initial investment as well, I invested $2,000 more in Ethereum and $2,000 more in Litecoin. Bitcoin had been hovering around the 16K-18K mark and didn’t seem like it was taking off like the other two. Within 3 days of my investment, I had earned another 30% on the account as a whole.

Conclusion

I plan to withdraw my initial investment of $4,900 after my account doubles in value to reduce my risk and let the coins I have left grow in value over the next year. I will keep rebalancing, and invest in new cryptocurrencies as they become available in Coinbase. If I lose the profits at this point, it was a fun experiment that helped me diversify my portfolio and I can tell others that I at least tried to invest in cryptos. If it continues to grow, then I will keep drawing out profits every 6 months or so to lock them in in case this is truly a bubble and not just a rising new currency type that will eventually be more commonly used than country-specific currencies.

If after reading this, you want to try this or a different strategy, please use my referral link to sign up! You receive $10 USD in Bitcoin when you invest $100 or more.

I’d like to hear from you about some of your strategies and outcomes with investing in cryptos.