Long-time readers know the importance of benchmarking a portfolio, but some investors may not know what is required to calculate the ITA Index. Understanding how to use the TLH Spreadsheet is at the core of calculating the ITA Index. Assume you are constructing a portfolio using sixteen different classes. Here is a list similar to what I use in nearly every portfolio. I’ve included the critical ticker for each asset class.
- Large-Cap Blend (VTI)
- Large-Cap Value (VTV)
- Mid-Cap Value (VOE)
- Small-Cap Value (VBR)
- Large-Cap Growth (VUG)
- Mid-Cap Growth (VOT)
- Small-Cap Growth (VBK)
- Bonds and Income (BND)
- Developed International Markets (VEU)
- Emerging Markets (VWO)
- U.S. Real Estate (VNQ)
- International Real Estate (RWX)
- Commodities (DBC)
- International Bonds (BWX or PCY)
- Precious Metals (GTU or GLD)
All of these Exchange Traded Funds (ETFs) with exception of DBC, GTU, and GLD are commission free if you are a client with TDAmeritrade. Otherwise the commission is $7.00 per trade. Be sure to negotiate with TDAmeritrade for the $7.00 rate as that is not automatic. At least it was not a few years ago. If you are with Fidelity or another discount broker, select commission free ETFs that represent the asset classes you want to include in your portfolio.
After you determine the asset classes to include in the portfolio, invest 5 shares in each of the above sixteen (16) ETFs. Once this is accomplished you are ready to begin a calculation of the ITA Index, provided you know how to use the TLH Spreadsheet. Platinum members have access to a number of “Camtasia” audio/video help sessions. If there is something you don’t understand or I was not complete in one of the “Camtasia” sessions, I will develop a new “Camtasia” to help you over the hump.
For more information on the importance of benchmarking a portfolio, go over to the right-hand sidebar and under Categories select the option, Benchmarks. You will find a number of posts on this important, but frequently neglected, topic.