Portfolio software reviewed
A software package can make you a better investor by ensuring you have the right information to run your portfolio
Are you a self-directed investor who muddles through at tax time using a combination of broker records, spreadsheets and crossed fingers? I must confess I am. I hope, rather than know, that what I’m delivering my accountant will minimise my tax bill. And because I don’t have an accurate picture of my portfolio I sometimes make buy, hold and sell decisions based more on gut feeling than cold, hard facts.
Fellow self-directed investor Tony Ryburn became so frustrated that he, with his son and two software experts, developed a portfolio management program, Sharesight.
“Record-keeping was a nightmare and working out the true performance of my portfolio so that I knew whether it was worth all the drama was nearly impossible,” says Ryburn.
The Australian Securities Exchange also points out how important it is to regularly review your portfolio so you know whether you are meeting your investment goals.
“Many investors have a complacent attitude to investing. As a result, they lack the market information necessary to make informed investment decisions, are forced to behave reactively and may end up losing out,” says the ASX’s record-keeping education module. “However, by tracking your portfolio, you will give yourself the chance to plan ahead and take advantage of opportunities such as buying more shares in a particular company that, by your reckoning, is trading at a discount.”
Sounds good, so I decided to investigate what help we could all get to make us better investors.
FREE RESOURCES
Free stuff particularly appeals, so first port of call is InvestSmart’s portfolio manager. This free
program lets you detail your portfolio, shares, funds, exchange traded funds (ETFs), property, cash and alternatives in the one place. You can download the shares from your broker with compatible software or you can input it yourself. The manager will then give your portfolio a health check based on your time horizon and investment goals. It also enables you to explore ways you can improve your portfolio via a “sandpit”, says CEO Ron Hodge. “You can ask, what happens if ... ?”
The perfect score is 100% but many investors only start to be concerned when it gets to around 70%. You also get access to limited free articles: InvestSmart owns the Eureka Report and Intelligent Investor. But at tax time this free service is not of any more use than your spreadsheet.
“Our free portfolio manager allows you to print off or download your portfolio to provide to your accountant. However, it does not do any tax calculations in itself,” says Hodge. “We’re currently working on a better tax statement to provide to your accountant but it won’t be available for a few months.”
Sharesight, developed in 2006 by Tony Ryburn and his son Scott, signed up its first customer in 2008. It offers a limited free service allowing an investor to keep tabs on one portfolio of up to 10 holdings. It provides standard tax and performance reports.
USER PAYS
Both InvestSmart and Sharesight offer upgrades. With InvestSmart you gain access to all its research, articles and model portfolios for a $770 annual fee. And if you invest through InvestSmart you pay 1% of the value of your portfolio for actively managed investments and 0.7% for passive funds, which will be held in a separately managed account. The average portfolio is $50,000 to $60,000, says Hodge, meaning it would cost a maximum of $500 to $600 in fees. And if you have a portfolio of $50,000 or more you also get access to all the research and information.
For larger portfolios, say $250,000, fees would rise to $2500 but self-directed investors can follow any or all of InvestSmart's suggestions and invest through their own broker. The service is not designed for high-net-worth investors who are serviced by financial planners, says Hodge.
With Sharesight you can upgrade to the investor package for $25 a month (or $275 a year) where you can manage up to three portfolios with unlimited holdings. As well you get access to performance graphing, benchmarking and portfolio sharing. The expert package enables you to run up to five portfolios and costs $39 a month ($429 a year). Investors can get a 30-day free trial for either package.
Apart from these solutions there’s a selection of other software programs, most of which can now be downloaded over the web, available to help investors manage their portfolios. They offer an array of fairly simple-to-use tools to help you minimise your tax and monitor your portfolio – and individual elements of it – at the stroke of a few keys. And most don’t cost the world. Some of the programs also offer free trials so you can try before you buy. (See page 94.)
Stockmarket Plus from Maus, one of the big suppliers of software programs, is a desk-top portfolio management system developed in Australia. Chris Palmer, Maus project manager, says investors can use Stockmarket Plus to manage shares, including overseas shares, options, warrants, managed funds, contracts for difference and property. “It can drill down on how your portfolio and individual elements of it are performing and enable you to prepare detailed reports, including at tax time, to give your accountant.”
People relying on their online broker for tax and other reports will find their capabilities are lacking, he says.
The company offers investors a 30-day free trial and the opportunity to upgrade to a version that automatically updates share prices. It also has phone and email support and live webinars.
Topshare is a share management program for Australian shares and funds only that has been around since 2000. Sole director Chris Jackson says Topshare enables investors to minimise their capital gains tax (CGT) by making sure they can establish the correct cost base. “For example, there are quite a few situations where you don’t really get good records from your broker, such as mergers and demergers and special dividends,” says Jackson.
Also if you trade and have multiple parcels of particular shares, the tax office allows you to nominate which one you choose for CGT, but brokers don’t usually supply this, says Jackson. “Importantly, Topshare allows you to monitor performance, including the internal rate of return, of your entire portfolio or individual stocks.”
The company offers a 60-day free trial. “By that time people should know for sure whether it’s useful for them,” says Jackson.
ONLINE COURSES
The ASX website is a great resource for self-directed investors, and it’s free. Using MyASX you can create watchlists, allowing you to monitor the profit or loss on shares, options, warrants and other securities you either own or are interested in. And its education centre offers many online courses on shares (including record-keeping), bonds, hybrids, exchange traded
funds, warrants and instalments, Australian government bonds, options and futures. As well you can get access to articles from experts and research if you subscribe to a free monthly newsletter.
It can also be worthwhile to join the Australian Investors Association (investors.asn. au). Membership is $115 for one year or $195 for two years, plus a one-off $20 joining fee.
The AIA has over 2500 active investors from diverse backgrounds. Many of them are experienced and sophisticated and are happy to share some of their insights and key information. It offers access to education, either face-to-face or electronically, for all levels of investors, local events and resources, including portfolio management help. Members can download simple spreadsheets for shares, property and tax.
AIA also gives its members lots of information on portfolio design, reviewing their portfolio and taxation, including case studies that bring the theory to life.