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How do I know how my Net worth and Portfolio are really doing?

Updated: May 9, 2023

Improve your Net Worth by working on your Portfolio


Portfolio

Net worth is the one thing that gives you a snapshot of how rich your financial health is and how effectively you are managing your money matters. It is the GPS for your retirement savings. It tells you where you are now on your financial journey and which way you need to go to get to your destination.


To put it simply, net worth is the difference between what you own and what you owe. If your assets surpass your liabilities, you will have a positive net worth, and if your liabilities beat your assets, you will have a negative net worth. Theoretically, your net worth is the value in cash you would have if you were to sell everything you own and paid off all of your debts.


When it comes to your financial strength, there is no ubiquitous magic net worth number you should be striving for. But, you should use your net worth to pursue your progress from year to year and to hopefully see it improve and grow over time. You can also use the retirement calculator to estimate what your net worth needs to be on the basis of your expenses.


Your net worth will be dependent on your investment performance as time goes by. To find out how your portfolio is really doing, you’ll need to monitor the performance of these investments to see how they are working together to help you progress toward your goals. Generally, progress means that your portfolio value is steadily increasing over the long term, even though one or more of your investments may have lost value, or you may have shorter periods of negative performance.


While estimating your investment performance, you want to be sure to avoid comparing apples to oranges. Finding and applying the right evaluation grades for your investments is important. If you don’t, you might end up drawing the wrong conclusions. It can be challenging for the best of us to comprehend all the financial aspects of building toward a sound portfolio performance. Especially:


Difficulty in aggregating returns

  • To have a consolidated record of all your assets and returns, it is essential to accurately measure their performance

  • Aggregation is needed at various levels to work out risk and facilitate better investment decisions

  • To manage data from multiple sources, you need a system that can speak to multiple accounts that you may be operating out of.


Difficulty in understanding risk

  • The risk of keeping your money in savings or fixed deposits is that you’ll fall behind the pace of inflation.

  • Your investments could grow in value slower than prices, which is more likely to happen if you invest in cash equivalents.

  • There is a possibility that your investments don’t earn enough to cover your retirement requirements.

  • To ensure you avoid these pitfalls, you need a way to continuously monitor, understand and act upon the risk in your portfolio.


Difficulty in getting insights in order to improve performance

  • Access problem: It is not feasible for everyone to rely on expensive financial advisors to give remarks on their investments. Though there is ample information available from a technical aspect, there is a lack of valuable wisdom from experts.

  • Excess problem: The abundance of mainstream content has caused to form a cesspool of information. It is tough to differentiate between meaningful and inconsequential particulars and harvest insights from them.

  • In addition to this, when there are insights it is difficult to understand if you should act on any particular investments or at a portfolio level.


How can you overcome this?

  • Understand that it’s a long-term game, not once done. A long-term investment is not just an option, it’s a strategy that can be followed to practice investment.

  • You can build an Excel Macro dashboard. It can automatically calculate metrics such as an asset's or a portfolio’s standard deviation, percentage of return, and overall profit and loss.

  • If possible, dive into the fundamental drivers, understand market cycles, look at risk-adjusted satisfactory returns, and don't try to hit the ball out of the park. Analyze your investments and improve the quality of your portfolio

How do we do it?

  • At Cambridge Research, we have built a platform that gives busy professionals a quick, easy, and accurate way to aggregate and understand the returns, risks, and opportunities in their portfolios.

  • It helps understand the best and worst performers in your folio and the rationale behind their performance.

  • We are a team of researchers, investment analysts, and techies that bring together extensive research for 18 different asset clusters and 5800 different products basis their fundamentals, current performance, consistency, and market parameters.


 

Take charge of your investments and ensure their growth - check your portfolio health today!


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