How to Audit Your Own Investments

By Lisa AberleLifestyle and

I've hinted before that I was a passive investor. And by passive, I mean that I have always set up a 401(k) and IRAs, then promptly ignored them. But since 2013 is the year I want to learn more about investing, I knew I needed to evaluate our current investment portfolio.

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  • Am I saving enough for retirement?
  • Am I diversified?
  • Is the risk of my investments appropriate for my age/circumstances?
  • Is my money in the best investment vehicles?

So first I needed to know what we had to work with.

1. List all your investable assets. Your investable assets may include things like an emergency fund, work retirement plan accounts, bank accounts, CDs, mutual funds, annuities, cash value of life insurance policies, stocks, bonds, and real estate (not including your primary residence or vacation home).

My list included our emergency fund, my work plan account, various savings accounts, and some individual stocks. This step didn't take long, because our list of investments is short. We had already rolled over some old 401(k)s a few years ago, we didn't have most of the assets on this list, and we had cashed out my husband's life insurance policy (because I am a term kind of girl).

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2. Find the account value of each investable asset and total them up. Once you have a list of your accounts, find out how much money is in each one.

This was a relatively simple step. I dug through a few dusty folders in our filing cabinet to find some IRA statements before deciding that I needed to register an account to get online statements. Then it was easy to add up everything.

3. How is your investment portfolio invested? After you have the entire list of your investment accounts, it's time to get down to business. Dissect each account: Is it invested in mutual funds? Which kind? Individual stocks?

For instance, my husband's Roth IRA consists of 51% value funds and 49% global funds. My Roth IRA with another firm is 51% growth and 49% growth and income. Include the funds that are invested as well. One of my husband's accounts has Capital World Growth and Income Fund, among others.

4. How are your investments performing? You can find out how well your funds are performing by reviewing your statements. With the exception of my work plan, all our accounts were upfront about the funds' performance. I could find out how well it did from its inception, the past 10 years, five years, and one year, as well as since I had started participating in that particular fund.

My work plan's statements and website told me only that I had invested in Fidelity, but not which funds. I am sure I have a record of it somewhere, but thanks to my “ignorance is bliss” mode, I have no idea where. They did include the performance of each of Fidelity's funds, but I need to call our plan to figure out which funds I am invested in so I can properly analyze my investment portfolio.

5. How are your investments performing compared with other investments? By following the instructions in this post, you can evaluate an individual investment.

I plugged the ticker symbol (CWGCX) for the fund I mentioned earlier (Capital World Growth and Income Fund). If I am evaluating Morningstar's comparison correctly, its expense ratio is greater than the category average, plus it's performing in the top 72% of funds in its category in the last 10 years. Nice. I really mean not nice, of course. I tried another fund with a different firm. This time the fund was in the top 55%.

Answering the investment questions

So, have I saved enough so far? Some sites recommend that a 35-year-old (which I am not there yet) should have saved one time's annual earnings. I have saved more than that, actually. However, my husband has saved about half of what he needs. Because we consider all the money as our money, no matter who earned it, it averages out that we have enough saved in retirement so far to match our household's annual income.

To decide if we are diversified enough and whether our investing portfolio is appropriately risky, I need to determine which Fidelity fund(s) I have. But I can start with what I know now. Of our entire investable assets, 25% is in cash, 0.5% is in individual stocks, and the rest in mutual funds. Of the 75% in mutual funds, about 45% is in funds that have moderate risk while the other 55% is found in more risky investments.

For our age, I think that's too much in cash (although we have some significant expenses coming up). I suppose we could also invest in riskier options since we have a few decades to go before we need the money.

And is our money in the best investment vehicles? Yes… and no. Before evaluating our funds, I hadn't realized how varied fund performance is. We have some that make other funds look good (I hope you have some of those!).

Now I need to do more research to find better-performing funds. In addition, we don't have any index funds, so I want to allocate some of our cash to those.


Before researching this article, I would have told you that this stuff was too hard for a non-financial person to understand. And honestly, it wasn't easy reading. (They use too many undefined terms and acronyms, for one thing!) But I was surprised by how much I learned, just by reading through reports and statements and Googling terms when I had to. Several of the websites had excellent investor resources that were written in simpler terms.

After spending several hours on this information, I feel that I have made some progress in my investing education. I highly recommend this exercise to any investors who are afraid to tackle stuff like this.

Do you have any tips on how to analyze your investments?

The original article can be found at to audit your own investments