First Steps Toward Independent Portfolio Managment

Portfolio management is not equivalent building a house or overhauling a car engine.  It is not that hard, so don’t throw up your arms and say you cannot do it yourself.  With Internet access, it is much easier than it was twenty to twenty-five years ago.  Here are steps to setting up your own portfolio, managing the assets, and monitoring it on a yearly basis.

1) Open up an account with a discount broker.  I emphasize discount as you will be doing this yourself.  There is no need to pay full brokerage fees.  While there are many discount brokers, I happen to like TDAmeritrade as they have over 100 commission free ETFs, and their statements are among the best in the business.  Opening up an account with a discount broker can be completed on-line or you can go to a “bricks and mortar” location if you need help.

2) Once the account is open and you know the name of the account and password, take a little time to become familiar with the web site of the discount broker.  TDAmeritrade has more information available than you will use.  Don’t be confused with all the options available.  TDA caters to day traders and we are not in that business.  In fact, I highly recommend investors avoid day trading.  Take the long-term “turtle” approach to investing.  Add dollars to your portfolio each month, keep the asset allocation plan in balance, and let the markets do their work. 

3) Now that you have an account number, user name, and password, what is next?  This is the time to set up an asset allocation plan.  I’ve discussed this many times at various places on the ITA blog and readers can be sure I will be writing about it again.  Even if you don’t quite know what asset allocation is about, at least make your first purchase to become familiar with the process of buying a stock, index mutual fund, or index ETF.  ETF stands for Exchange Traded Fund and it is a basket of many stocks.  I favor using ETFs and I recommend the first ETF purchase be VTI as you are buying the United States stock market with this purchase.  Start out with a purchase of 10 or 25 shares of VTI just to get your feet wet.  Make sure your TDA account is set up for commission free purchases.  Since I almost always use limit orders, set the purchase price a nickel or dime below the current price.  You will likely see the limit order struck during the day you place the limit order.

4) With your discount broker account open, you might select one of the portfolios I am discussing this week here at ITA Wealth Managment or if you are a Platinum member, one of the seven portfolios I review on a monthly basis may be of interest.

5) Managing and monitoring the portfolio is modeled weekly as I review various portfolios.  If you have questions, please ask in the comments section.

The six portfolios I am discussing this week are the following and they range from ultra conservative to aggressive growth.  Here are the general titles.

  • Ultra Capital Preservation
  • Capital Preservation
  • Balanced
  • Modest Growth
  • Growth
  • Aggressive Growth

The first two portfolios, Ultra and Capital Preservation are posted and available for review and study.  Platinum members can see the asset allocation plans via the Quantext Portfolio Planning (QPP) analysis.  The Balanced portfolio will be available no later than tomorrow.

Capital Preservation Portfolio

This portfolio is not quite as conservative as the Ultra Capital Preservation asset mix.  Fixed income was decreased by 11% points and those assets were shifted toward equities.

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