![]() Now it's up to you to rebalance your portfolio, always keeping tax consequences in mind. The significance of the threshold is that once an asset class exceeds that threshold, it turns this cell red. Gobind Daryanani, CFP (See Opportunistic Rebalancing: A New Paradigm for Wealth Managers, Journal of Financial Planning, January 2008). An asset class with a 10% allocation would have a 2% threshold. For example, an asset class with a 25% allocation would have a threshold of 5%. Red cells mean that the difference between our target and actual allocation is greater than the Threshold we've defined in the next column.Īs a general rule, I set the threshold for rebalancing at 20% of the allocation for each asset class. Now you'll notice that some of these cells are red and some are white. Next you'll see the difference between the actual portfolio value and what the target is. Once you have your target asset allocation, the sheet compares it to your actual allocation. The best asset allocation for you is going to depend on your age, debt, investment goals, time horizon, risk tolerance, and other factors. If you add other categories beyond what I have in the spreadsheet, you'll want to add rows for each here. You'll want to put in your own target asset allocation. This is the target asset allocation that we're using in the spreadsheet. There's a lot going on here and I want to walk through it for you. Once you have all of your investments into the holdings sheet, we can then now go to the Asset Class tab. ![]() That's what I've done because my Apple holdings have grown so much it skews my asset allocation plan (that's a good problem to have!). Alternatively, you could create a separate classification called Stocks and separate them from mutual funds and ETFs for purposes of asset allocation. I could, for example, classify my holdings of Apple and Berkshire as US stocks. You can classify stocks just like we classify mutual funds. In terms of asset allocation, you have two options. Google Finance functions pull in the same data for stocks as it does for mutual funds (except there's no mutual fund expense ratio). In the current version I use, I just incorporate them into the Holdings sheet. The original version of this spreadsheet, linked to above, contains a separate sheet for stocks. The spreadsheet works with individual stock holdings as well. ![]() A Google Finance function pulls in the data and the weighted expense ratio is just a simple formula. It works the same with the fund expense ratio. The spreadsheet pulls in the price using a Google Finance function, and the total value is then automatically calculated based on a simple formula. Next you'll enter the number of shares that you own for each investment. (The video below explains how to do this.) For example, you could add categories for REITs, emerging markets or small cap stocks. ![]() The drop-down contains most major asset classes, but you can add more. All of the other cells contain calculated values based on the Ticker.įor each fund we need to designate an asset class (Category column). The color coded cells in the columns for Account, Symbol (i.e., Ticker) and Shares are the cells where you need to enter information. ![]() And you could include mutual funds, ETFs, stocks, whatever you'd like. But this is where you start and you want to enter your portfolio. This is not my actual portfolio, though, I do own many of the mutual funds that are listed here. The data that I have in here is just demo data. The first step in using the spreadsheet is the Holdings sheet. It consists of three sheets–Asset Class, Holdings and Stocks. And as you'll see, it's a great tool when it comes to rebalancing your portfolio. It's extremely easy to use and will help you track your investments, asset allocation and mutual fund fees. You can get a free copy of the spreadsheet here. I'm going to walk through the spreadsheet in this article and video (see below). ![]()
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