Navexa Blog

Investment Tax Basics: Capital Gains, Dividend Income & Tax Implications

Post author By Thom Benny
Post date January 25, 2022

If you invest in Australia, the Australian Taxation Office requires you pay tax on both capital gains and dividend income. Here are some basic things to know about paying tax on your investments in Australia.

Paying a portion of our income to our government has long been a fact of life — the phrase ‘certain as death and taxes’ stretches back more than 300 years.

In Australia as elsewhere, this goes for income we earn from employment, a rental property, and other sources. It also applies to investment income.

Below, you’ll find information (general, of course, and not in any way to be considered financial or taxation advice!) about:

The Australian tax year and cycle.
Capital gains tax (CGT) events for investments (long and short term).
Taxable investment income from dividends.
Different ways you can report on your investments for tax purposes.
Tax benefits from ‘franked’ dividends.

Let’s start by explaining the Australian tax cycle.

Tax Time: Key Australian Dates

These are the key dates to keep in mind for calculating your portfolio tax and filing your tax return in Australia.

The income year for tax purposes — otherwise known as the ‘financial year’ — goes from July 1 to June 30.

This is the period for which you’ll need to collect and collate your financial information for assessment during the period known as ‘tax season’.

Australian Tax Season

Tax season runs from the start of the next financial year (July 1) to October 31 — a period of four months.

If you’re lodging your own tax return, you have until October 31 to do so. If you use a registered tax agent, you have a little longer — usually May 15 the following year.

Check with your accountant or the Australian Taxation Office (ATO) to ensure the key dates for your specific situation.

If you’re an investor, you’ll need to report on your portfolio’s activities during the relevant financial year. Here are the main things you’ll need to consider as an individual.

Capital Gains Tax On Investments In Australia

Australian tax law specifies that you must pay tax on any assets you own when you sell them, or when another ‘CGT event’ happens to them.

At its most basic, this refers to selling shares. But it covers many other events, too, including switching shares in a managed fund between funds and owning shares in a company which another company takes over (or merges with).

What Is The Capital Gains Tax Rate?

Australians pay CGT on their investments at the same marginal tax rate they pay on their personal income for the financial year.

So, for example, if someone earned $100,000 from their employment and also made $20,000 from selling shares they’d held for more than 12 months, their marginal tax rate would be 32.5% — meaning they would need to pay $6,500 in tax on the capital gains from their investments.

The CGT rate differs for individuals, companies and self-managed superannuation funds.

If someone sell some shares for a capital loss, this may result in tax benefits, since they can deduct that loss from any gains they may have realized on other assets. If they didn’t make any capital gains (only losses) in a given financial year, they can carry a capital loss over to other financial years!

Long Term & Short Term Capital Gains

Australian tax law makes a distinction between long term and short term capital gains. This is effectively an incentive for investors to hold investments for more than a year at a time.

In the example above, where someone makes a combined $120,000 in the financial year from their employment and selling some shares, they’ve held those shares for less than 12 months.

This means they pay the same tax on their investment profits as they do their personal income (for tax purposes, capital gain profit gets added to other income to determine the marginal tax rate).

But if that person held the shares for more than 12 months, they’d qualify for a 50% CGT discount. Instead of paying $6,500 of their $20,000 capital gain, they’d only need to pay $3,250.

Learn more here.

How To Calculate Your Portfolio’s Capital Gains Tax Obligations In Seconds

Bearing in mind we’re only talking about the capital gain side of portfolio tax, it’s easy to understand why so many of us don’t exactly look forward to tax time.

Navexa’s tax reporting tools are powerful ways to remove the need for someone to have to manually calculate — or pay someone to manually calculate — their portfolio tax obligations.

Navexa’s CGT Reporting Tool

What you see above is Navexa’s CGT Report.

Once you track your investment portfolio in a Navexa account, you can access a suite of analytics about everything from individual holding performance through to portfolio contributions, and of course tax analysis.

Provided the portfolio data in your account is correct and up to date, you can run an automated tax report in literally a few seconds.

The CGT Report Breakdown

As you can see in the sample image above, Navexa calculates your taxable capital gain and displays a detailed breakdown.

Under ‘Non Discountable Capital Gains’ you have:

Short Term Gains: The capital gains you’ve made on assets sold within 12 months of buying them.
Capital losses available to offset: Any capital loss you’ve realized by selling assets for less than you paid for them.

Under ‘Discountable Capital Gains’ you have:

Long Term gains: The capital gains you’ve made on assets sold after holding them for 12 months or more.
Capital losses available to offset: Any losses realized from assets you’ve sold after holding longer than 12 months.

Then you have your CGT Concession Amount and, finally, your total Capital Gain for the portfolio (for the financial year and tax settings you’ve selected).

It’s important to note that Navexa doesn’t provide tax advice. But as long as your account information is accurate and up to date, this should be all you need to file your return.

At the top right of the report, you’ll find buttons for exporting the report as both an XLS and PDF file.

So now you understand the basics of capital gains tax for investments.

Let’s dive into the income side of the portfolio tax equation.

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Investment Income Tax

Capital gains isn’t the only form of investment income people pay tax on in Australia. Just like income from a rental property, dividends count, too. You must declare investment income.

Dividends, of course, are payments made to shareholders as a percentage of an investment’s profits. These profits have generally already been subjected to Australian company tax. Thus, the ATO doesn’t tax shareholders again on the already taxed profits when they’re distributed as dividends.

Franking Credits

This is where ‘franking’ credits come in. If a dividend is ‘fully franked’, it means the ATO judges it has already been taxed appropriately.

Depending on where an investor’s personal tax rate falls relative to the rate at which their dividends have been taxed (and had the appropriate franking credits distributed with them), they’ll either pay less than their personal tax rate (a tax offset) or, in some cases, a tax refund.

This is a great guide on dividend franking.

How Australian Tax Law Treats Dividend Reinvestment Policies

Some companies allow investors to receive dividends in the form of new shares instead of cash. This is known as a dividend reinvestment policy.

For tax purposes in Australia, the ATO treats dividend reinvestment the same as cash dividend.

If someone receives new shares instead of a cash dividend, they need to pay tax on them as though they did receive cash.

Like a cash payout, reinvested dividends may be partially or fully franked, since they still represent investors receiving a portion of profits.

How To Calculate Your Taxable Investment Income Obligations In Seconds

Navexa doesn’t just allow you to skip the hassle of working out your portfolio’s capital gain for a financial year.

It also lets individuals drastically accelerate the process for determining their taxable investment income, too. Take a look:

Navexa’s Taxable Income Reporting Tool

When you automate your portfolio tracking in Navexa, the taxable investment income tool gives you everything you need to know when preparing your tax return.

You can see unfranked and franked amounts of investment income across your portfolio and the actual franking credit amount.

In the ‘Supplementary’ section, you’ll see six other fields:

The Taxable Income Report Breakdown

Share of net income from trusts, less capital gains, foreign income and franked distributions
Franked distributions from trusts
Share of franking credits from franked dividends

And in the ‘Income from foreign sources and assets section’:

Assessable foreign source income
Other net foreign source income
Foreign income tax offset

Below the return fields you’ll see a holding by holding breakdown of your taxable investment income, like this:

This shows you subtotals for payments from each holding, and grand totals for each column at the bottom.

At the top right of the report, you’ll find buttons for exporting the report as both an XLS and PDF file.

This is the automated way to fast-track preparing to declare investment income for assessment.

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Simplifying & Accelerating Investment Tax Reporting

We hope you’ve enjoyed this guide to the basics of portfolio tax in Australia.

We’ve covered the main points of tax implications for both capital gains and investment income (including franking tax offset).

There are, of course, many more scenarios and details than what we’ve had time to cover today.

As always, consult your accountant or seek other professional advice, and ensure you manage your tax obligations and tax return responsibly.

Try Navexa Today

Navexa empowers investors to build brighter financial futures with simple, but powerful, automated investment analytics and reporting tools.

The CGT and Taxable Income reporting tools we’ve detailed here are just two of the tools at your disposal when you automate your portfolio tracking with Navexa.

Tags investing, portfolio, stocks, tax

Financial Literacy Investing

Thinking Long Term: Investing Your Way To Financial Freedom

Post author By Thom Benny
Post date January 17, 2022

Powerful ideas on building life-changing wealth — from passive income investment strategies to staying calm through stock market crashes and financial crises.

How much do you think a person needs to invest to make a million dollars?

$100,000? $250,000?

Try $1,525.

If you invested $1,525 today in a fund that tracked the Australian stock market’s growth over the next 20 years — and you committed to investing that much every month — your portfolio would grow to just over $1 million.

(That’s based on the Australian market’s annualized performance over the 20 years to December 2017.)

While past performance is never any guarantee of future returns — and this post most definitely does not qualify as financial advice — going by that historical return, a meagre $352 a week is all it would have taken to build a million-dollar portfolio in those 20 years.

When you consider that putting that much into a savings account would have yielded not even half that over the past 20 years, it’s clear why some of us are prepared to accept more risk when we’re considering which long term investments we want to put our money in.

It seems simple, doesn’t it? Creating a significantly brighter future financial situation for yourself (and your family) is a matter of socking away money on a regular basis — personal circumstances permitting, of course — and letting the market work its magic.

As you’re about to see, executing a successful long term investment strategy isn’t as easy as it may seem.

You need some key ingredients: Financial education and literacy, clear investment objectives, a solid grasp of personal finance, and a specific investment timeframe or horizon, to name a few.

This post introduces some key ideas around investing for long term success and financial freedom.

Read on to discover some of the fundamental ideas and factors for those looking to build long term, life changing wealth through consistent and patient investing.

Examples Of Long Term Investment Strategies’ Epic Performance (Despite Multiple Stock Market Crashes)

Seth Andrew Klarman is a billionaire. The private investment partnership he founded in 1982 has realized a 20% compounded return for the past 40 years.

Let that sink in for a moment.

Twenty percent a year. For 40 years.

What started as a $270 million fund has grown to be worth around $270 billion.

In that time, the US stock market has, according to Wikipedia, crashed 10 times.

The 1987 Black Monday crash alone was enough to inflict serious, lasting financial damage to someone in my own family. The rest of their life they had to live with consequences of having sold in panic as investors all over the world rushed to get out.

But over Klarman’s 40 years running his investment portfolio, none of the 10 crashes have, in the long term, impeded him from racking up what most of us would agree is insane wealth.

According to him:

‘The daily blips of the market are, in fact, noise — noise that is very difficult for most investors to tune out.’

‘Klar’, by the way, is German for ‘clear’.

Whether or not Klarman’s name had any bearing on the way he viewed the markets during his four decades (so far), it’s certainly clear that ignoring the so-called ‘noise’ in favour of a long term strategy has been immensely profitable for him and his investors.

Noise: The Enemy Of Successful Long-Term Investing

When we talk about market noise, we’re talking about a lot of things.

Daily price movements, economic changes that impact the markets, like interest rate rises, and news flow are three common examples.

Even the talk of interest rate rises — amplified of course by the media — has been causing market jitters in early 2022.

Here’s a quick example of just how useless most noise is — and why smart investors like Seth Klarman ignore it, preferring instead to focus on their strategy.

https://twitter.com/BackpackerFI/status/1469366461407772675

The chart shows you the S&P500 index between 2009 and mid 2017. As you can see, annotated along the line is every time the financial media claimed ‘the easy money has been made’.

In other words, nine times they claimed the good times were over for the S&P500…

That things were about to get tough for investors…

That you should perhaps be scared about what was about to happen to the stock market.

And yet, while in the short term the S&P500 did indeed fluctuate — sometimes severely and abruptly — over the seven-and-a-half years this chart shows, it still doubled in value.

We can’t know how many people were scared into selling their stocks each time they read a ‘the easy money…’ headline. But, you can bet there were quite a few.

I know people who won’t even get into the stock market on account of the fact values can fall, let alone stay in stocks they own through volatile or uncertain times. Such is their appetite for investment risk (zero).

Getting back to Seth Klarman’s point…

Successful Long Term Investing Demands That You Can Stomach Volatility, Noise & Risk

‘Get rich quick’ has become virtually synonymous with ‘scam’. You read those words and you know there has to be a catch.

While it’s true that some investors do bag huge gains from speculative investments like penny stocks, it’s very rare that they’re able to repeat those successes by applying any sort of discipline or formula.

Getting rich quick, we could say, depends on luck. You have to be in the right investment at precisely the right time and you have to sell it before it plummets back down to earth (as many do).

Getting rich slowly, on the other hand — building financial freedom and exponential wealth by investing like the Seth Klarmans and Warren Buffets of this world — depends on something else.

Building financial freedom through investing depends on discipline.

As you’re about to see in this post, you have to cultivate discipline around your saving, spending and investing habits. You have to be honest with yourself about your goals. You have to understand how much risk, volatility and stress you’re prepared to tolerate. You have to start thinking in decades, not years — and certainly not months or weeks.

In other words, you have to find or create a long term investing strategy that you feel comfortable and confident is going to result in the financial freedom you seek.

And, of course, you have to get wise to short-term market noise like attention-grabbing headlines about the easy money having already been made.

What follows are some generally-agreed upon solid ideas and approaches from both the investment industry and the financial freedom (or FIRE) community.

(Again, NOT financial advice 🙂)

Find Your Investing Mindset & Bring Order To Your Finances 🔥

If you’re yet to begin investing, or you’ve started but are still caught up in the idea of getting wealthy fast, then you need to lay the groundwork for your strategy.

A solid long term wealth building strategy can’t exist without a strong foundation of financial literacy, discipline and clarity.

This means you need to get into the weeds on every aspect of your financial life.

You need to have a firm grasp on your whole financial position as it stands: Income, debt, expenses, savings, everything. Why? Because successful investing — no matter whether you’re aiming to make $100,000 or $100 million — depends on a few key principles.

Three Rules For Investing Long Term

Here are three tenets the FIRE community generally accepts as foundations for building wealth:

Spend less than you earn.
Invest the difference.
Continuously look to widen the gap between what you spend and what you earn.

If you don’t fully understand your personal finances, you’re not going to be able to confidently and consistently spend less than you earn.

And consistency, as many in the investing world can attest, is crucial to successful long term investment strategies.

The Power Of Investing Consistently Over The Long Term

Take a look at this:

Source: *https://www.lynalden.com/build-wealth/*

This table shows you how much your portfolio would be worth 25 years from now based on different monthly investments, which you can see on the Y axis, at different annual rates of return, which you can see along the X axis.

As you can see, just $750 a month ($9,000 a year) has the power to become more than $1 million.

That works out at $173 a week. So when you see a table like this, ask yourself:

How much money are you prepared to commit to become a millionaire?

If you’re not — or if you don’t have $173 a week at your disposal — then you need to assess your goals, priorities and your financial position.

Remember, the first rule is that we should spend less than we earn and invest the difference.

The Australian stock market returned an average 9.7% between 1991 and 2021, according to Canstar.

Going by the 25-year table above, a monthly investment of $1,500 would hit $1 million at that rate.

As you can see, the most powerful factor here is time. Remember Seth Klarman’s portfolio performance and opinions regarding ignoring market noise.

And consider this:

The stock market is extremely efficient at transferring wealth from the impatient to those who are patient
— Dividend Hero (@HeroDividend) January 10, 2022

Choose A Strategy (And Commit To It)

There’s no end to the opinions and advice out there about exactly how one should set about building long term wealth in the stock market.

Only you can determine your goals, values and risk tolerance.

Fortunately, we’re living in a time when there has never been such a plentiful and wide range of opinions and advice.

This section details three broad investing strategies commonly employed by long term investors.

First, a word of warning on getting too caught up in other people’s ideas about investing success (or any success, for that matter):

"If you want to make the wrong decision, ask everyone."@naval
— Navalism (@NavalismHQ) December 17, 2021

While there’s lots to learn and much to gain from following in the footsteps of great investors, it’s important your investment strategy suits you first, not someone else.

(If I had a dollar for every person who says they subscribe to ‘the Benjamin Graham method’, I wouldn’t need my own investment strategy.)

Idea #1: Buying Exchange Traded Funds

Exchange traded funds, or ETFs, have been growing in popularity in recent years — particularly among the FIRE community.

You can buy an ETF like you would any shares on the stock market. The difference is these funds are structured to track indexes, sectors and other specific market themes.

For example, I recently bought shares in an ETF that tracks the Dow Jones technology index. This means I’m exposing my capital to the progress of that entire market, as opposed to picking out a particular company to invest in.

Many long term investors and financial freedom seekers favour ETFs as they are relatively ‘low touch’ — you can buy them easily and bypass the need to conduct research into individual securities.

Think of ETFs as a door through which you can access different parts of the markets and financial system. You might choose an ETF than tracks growth stocks in Asia. Or, you could choose one that tracks a particular commodity or currency pair. Index funds, while different investment vehicle, can service a similar function, as do mutual investment funds.

Idea #2: Buying Growth Stocks & Value Stocks

While you can bypass researching individual stocks using ETFs or index funds, you might actually prefer to invest directly in particular stocks.

One thing you’ll need to understand when building and managing your investment portfolio is diversification. This is a good place to start.

If the risk tolerance, strategy and investment timeline allow for it — and if an investor can commit to doing in-depth market and company research — they may choose to invest in companies.

While there’s a lot of different types of companies trading on the stock market, from the miniscule (speculative penny stocks) to the mammoth (Tesla, for example), across all sorts of criteria and risk profiles, let me introduce you to two types you might find in a long term investment portfolio.

Pocket Rockets For Your Portfolio 🚀

Growth stocks are the jet boats of the stock market. They’re exciting, attention-grabbing companies that carry both higher promise and higher risk relative to more established, stable companies.

These stocks often tend to be technology companies, and are often smaller companies that are in the midst of capturing market share. According to Bankrate, these companies ‘generally plow all their profits back into the business’, since they’re in the process of expanding. This means they may be less likely to pay dividends to their shareholders, who rely instead on rising valuations to generate returns on their investments.

Growth stocks don’t necessarily have to be small-cap companies. Generally speaking, investors probably need to be prepared to be more active when it comes to owning a growth stock, since their value can rise and fall faster than blue chip companies. This means a ‘set and forget’ strategy which may be appropriate for ETF investing may not apply to riskier growth stocks.

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Buffett’s Favourite Types Of Companies 🛳️

Value stocks, on the other hand, present a very different prospect for an investing strategy. If growth stocks are jet skis, value stocks are a cruise ship.

In basic terms, a value stock is a company that is trading at less than their ‘true’ value. How you determine that value isn’t an exact science. There are several methods you can use to calculate whether a company’s share price is trading at a discount on its fundamental value (one of the most common methods is the discounted cashflow calculation, which you can run in our portfolio tracker for free).

Value stocks often display high dividend yields and low price-to-earning ratios. They tend to be big companies that don’t have much room left to grow relative to their smaller, more dynamic counterparts, but which can also produce higher long-term returns (even if they may not deliver spectacular short term gains like a growth stock).

Value stocks might suit more of a low-touch, buy-and-hold type of investment strategy. For many seeking financial freedom, the prospect of lower share price volatility and a steady stream of dividend income makes value stocks a sensible inclusion in their portfolio.

It’s worth noting as well, that there are ETFs on the market that track value stocks — meaning you don’t necessarily have to approach value investing company by company.

Idea #3: Dividend Stocks & Passive Income 💵

For many on the financial freedom trail, dividends are king. Here’s why.

Source: https://www.dividendmonk.com/reinvest-dividends/

What you see here is the power of income in a long term investing strategy.

The red bars represent the annual returns over 40 years of holding a stock that rises an average 8% a year and collecting the dividend payments as cash.

The blue bars show you the same investment with reinvested dividends over the same time period.

If you held the stock and pocketed the dividend cash, after 40 years a $50,000 investment would have grown to around $1 million.

But if you reinvested those dividends — meaning you opted to receive additional shares as opposed to cash — you would end up with more than $3 million.

That’s a substantial difference. Of course, the example doesn’t account for what you could have done with the cash if you’d taken it instead of reinvesting it (more on that below).

Why Income Investing Suits Long Term Investment Strategies

Remember the three points from the start of this post:

Spend less than you earn.
Invest the difference.
Continuously look to widen the gap between what you spend and what you earn.

You can understand why income investing is so attractive for those seeking financial freedom.

Dividend reinvestment hits all three of these action items. This is why so many investment strategies include income investments.

Once I’ve bought your shares and committed to leaving them for a long period, I don’t need to put any more of my regular income into the stock.

As the stock pays me dividends in the form of more shares, I automatically invest the difference.

And, even better, the more shares I accumulate through dividend reinvestment, the more I widen the gap between what I spend and what I earn (remember that in the example above I start with just $50,000 and end up earning nearly $3 million through capital gains and reinvested income).

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Einstein’s Theory Of Compounding Investment Returns 🔬

Income investing is popular for good reason. Especially with those looking to invest for long term wealth.

If you decide to make dividend stocks (or ETFs — remember ETFs exist for most markets and sectors, and you can find plenty of income-focused funds on the market) part of your long term investment strategy, you’ll be in good company.

Legend has it that someone once asked Albert Einstein what he thought was the eighth wonder of the world.

His response: ‘Compound interest’.

‘He who understands it’, Einstein said, ‘earns it. He who doesn’t, pays it’.

Wise words worth keeping in mind as you assemble your plan to build long term financial freedom!

Aim For ‘Infinite’ Investment Returns ♾️

If this sounds a little ‘hidden secrets of the rich’, that’s because it is.

Infinite returns are ultimately what you should aim for if you aspire to the sort of financial freedom the world’s wealthiest long term investors are able to enjoy.

The idea behind the term is that you buy an investment, which makes you money (either through capital gains, income, or both) and then you sell your initial stake at a certain point.

For example, say you buy $50,000 worth of shares in an ETF that tracks relatively stable, income-paying companies. You leave it alone for five years. Between capital gain and reinvested dividend income, your position grows to be worth $100,000. Then, you take out your initial $50,000, and leave the investment to run on profits alone.

If you consider the dividend reinvestment illustrations above, just imagine that the $50,000 you start with in the 40-year example was the result of profit from a previous investment.

The, imagine you do it again. What started as $50k profit becomes the capital for a new investment. Then that investment generates its own profit, allowing you to free up the $50k and continue ‘cycling’ through new opportunities.

This is the essence of infinite investment returns. Of course, this explanation makes it sound super straightforward. Like everything in the investing world, this strategy carries risk.

But when you adopt the long term investing mindset…

And you’ve learnt to ignore the market noise that triggers so many into FOMO buying and panic selling (I literally saw this in the course of writing this post)…

And you’ve structured your personal finances in such a way that consistently investing in the assets you want your money in for the long term without adversely impacting your day to day…

Then the prospect of infinite investment returns becomes more and more attainable the longer you stick to your plan.

If buying a lotto ticket is one extreme of the investing world, then infinite returns are the opposite extreme. They don’t happen overnight and they take time and sacrifice to create.

As Blake Templeton, of Forbes, points out, building wealth is a long term game.

‘Those dreams of hitting it big in the stock market are exciting, but they rarely come true. Instead, focus on building long-term wealth that grows consistently over time, like the super-rich. When you use their same strategies for wealth-building, you set yourself up for exponential gains that you can pass down to future generations.’

Takeaways: Continuously Invest In Knowledge — And Track Everything As You Go 📈

Perhaps the most important investment you’ll ever make on your journey to financial freedom through long term investing is in yourself.

(Yes, you’ve probably read versions of that a thousand times on Twitter. But it’s for a reason!)

At a high level, you have to back yourself to create the discipline, strategy and trajectory that will allow you to realize your vision of financial freedom.

Once you’re making progress though, it’s not only financial assets you need to invest in. You should also make time to build your knowledge of finance, investing, economics and useful information about the wider world (as opposed to ephemeral, short-lived ‘noise’).

That means making connections, reading books, listening to podcasts and following blogs (like this one, obviously). Like everything in life, the investment world never stays still. Change is constant and often dramatic.

Trends shift and investment strategies that work today may no longer work next year — see the ructions over the US Federal Reserve’s announcement about (finally) raising interest rates in early 2022.

Make sure you have good sources of information to keep building your financial literacy and stay informed of the deep themes and trends at play in the world and its markets.

Track & Analyze Your Portfolio Consistently

Most of all, make sure you have good sources of information about your own financial position and portfolio progress. As Peter Drucker points out:

‘What can’t be measured, can’t be improved.’

As so many people have found when they start tracking their fitness, their diet or their personal finances, you start behaving differently when you can fully grasp your long term progress.

Long term investing is no different.

Whether you’re investing $500, or $1,000, or $5,000 a month towards financial freedom decades down the line, you’re going to need to accurately track your progress.

This is what we specialise in here at Navexa — advanced investment analytics for everyday people looking to build long term wealth.

Navexa portfolio tracker — The Navexa Portfolio Tracking Platform

If noise is the enemy of long term investing, then proper portfolio tracking is one of your best defences against it.

Try tracking your investments in Navexa for free today.

Tags investing, stock market, stocks, wealth building

Financial Literacy Financial Technology Investing

Why Your Brokerage Account Might Not Reflect Your True Portfolio Performance

Post author By Navarre Trousselot
Post date August 25, 2021

Your trading account is designed to help you buy and sell investments. While it shows you a bunch of metrics related to your portfolio, it might not reflect your actual returns or performance. This post explains the difference and shows you why tracking is arguably as important as trading itself.

As a dedicated portfolio performance tracking platform serving thousands of people, the team here at Navexa communicate with our community frequently.

One of the most common questions we receive from those just beginning their portfolio tracking journey with us, is this:

‘Why are the investment returns in my Navexa account different from those in my trading account?’

Many of our new members are accustomed to viewing their portfolio performance through a very different lens from the one Navexa provides.

That’s because the numbers you see when you log in to your trading account aren’t so much to do with portfolio performance as they are with nominal ‘gains’ or changes in value.

In a portfolio tracker, you’re seeing your rate of return, or growth rate, over time.

In this post, we’re going to explain the difference.

We’ll explain why, in our (biased) opinion, you won’t get a clear and complete picture of your long-term investment returns from checking your trading account alone.

We’ll explain how the figures you see differ both in their calculation and the information they reflect.

We’ll touch on the extent to which brokerage fees and commissions impact your portfolio performance — and why your trading account may not reflect that impact.

We’ll explain how an investment’s true performance differs from its gains, and share with you exactly how our portfolio tracking platform calculates that performance.

And, we’ll show you how to access our purpose-built portfolio performance tracking platform free today so you can see for yourself the difference from the numbers in your trading account.

Let’s start with the key differences between trading account numbers and those in a portfolio tracker.

Trading Accounts Are For Trading — Not Portfolio Performance Tracking

In our CommSec Review, you’ll learn my honest opinion about using Australia’s most popular trading platform.

As a trading platform, it’s great. But, as I argue in the review:

‘Having been in the market since 2013, and done my fair share of buying and selling, all I can see are two performance metrics: Today’s Change, and Total Profit/Loss.
‘To be blunt, that’s not enough for me.
‘Why?
‘Because portfolio performance is a lot more complex than just my total profit or today’s change.
I need to see lots more.’

I can see today’s change in both dollar and percentage terms, my total profit/loss, my portfolio’s current market value, and the total cost (which, as you’ll see, isn’t actually my total cost).

Below this portfolio level information, there’s a holding-by-holding breakdown. This shows me the price I bought each investment at, the last price it traded for, the day’s percentage change and so forth.

Take a look:

That’s all the information available to about how my investments are progressing. Frankly, it’s not enough to satisfy my appetite for data on my journey to creating long-term wealth through investing.

Which is why I’m in favour of using a dedicated portfolio tracker.

As I said, given that we operate one such tracker, this is obviously a biased opinion. But take a look at this screen compared with the one from my trading account:

That’s the Portfolio Performance Report in Navexa. Rather than providing just a handful of metrics about profit/loss and price changes, this screen shows four key metrics:

Total Return: In both dollar and percentage terms, the Navexa portfolio tracker shows me my portfolio’s actual, annualized return net of trading fees, income and currency gains (or losses).

Capital Gain: This shows me how much of my total return is comprised of capital gains across my investments. Again, this is annualized to reflect how long I’ve been running this portfolio (otherwise, my ‘gain’ would be the same regardless of whether it had taken me one year, or twenty, to achieve).

Dividend Return: This shows me how much of my annualized return over a given time period is down to my investments generating dividend income. In my CommSec account, for example, I can’t see my income factored into my portfolio performance.

Currency Gain: While not applicable in the example above, the reality of investing across multiple markets and currencies is that foreign exchange fluctuations impact a portfolio’s returns. A dedicated portfolio tracker, like Navexa, shows this.

You’ll also see, beneath the metrics I’ve just detailed, there’s another row showing the same numbers for IOZ, a leading ASX200 ETF.

This allows me to see at a glance how the portfolio is performing relative to the ASX200 across each of these factors. In the example, you’ll see that while the annualized return and capital gain is outperforming the benchmarked fund, it is lagging behind with respect to dividend income.

This is a valuable insight — and not one I can easily get by looking at my trading account.

In the holding list below, you can see the performance breakdown for each of the investments in the portfolio.

All the numbers you see reflect more than just the price movement of the investments. Here’s an example.

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Fees & Commissions Impact Your Performance (But May Not Be Reflected In Your Brokerage Account)

My trading account doesn’t show me how fees are impacting my performance. That’s probably because I pay my broker to execute my trades for me. But consider this:

Let’s say I make 50 trades a year for 10 years at a cost of $20 a trade.

That’s $10,000. At the end of the 10 years, say I have 50 investments in the portfolio. When it’s time to sell out and collect the cash I’ve (hopefully) earned as the portfolio’s total value has appreciated over that time… that’s another $1,000 for all the sell trades on the 50 holdings at the end of the period.

The impact of fees? $11,000.

If the portfolio had started with $50,000, and we assume a 100% total return over the 10 years (that’s a 7.18% annualized return), the investor has, on paper, doubled their money.

Hooray! Right? Not quite.

You can see how this plays out in terms of actual portfolio performance.

For our purposes in this post, I hope you can see that trading fees play a major part in determining your true performance. Which is why you need to be able to easily see your returns net of that impact — as opposed to hidden away, as they are in many trading accounts.

Fees Aren’t The Only Factor: A Dedicated Portfolio Tracker Helps You Measure Everything Impacting Your Performance

While my CommSec account is, in my opinion, brilliant for conducting market and investment research (their tools and resources are second to none across Australian trading platforms), it’s severely limited in showing portfolio performance details.

When you really dive into the world of long-term wealth building, there are four factors that deeply affect your real returns.

Remember, I’m not talking about gains here. I’m talking about our net performance after every factor impacting a portfolio has been accounted for.

Here are the four factors:

Time: While it might be tempting to look at your overall returns going all the way back to the first day of a portfolio’s life, this can result in us misinterpreting our performance. My favourite illustration of this? Would you rather make a 500% return over one year, or 10? There’s a huge difference, and we all know it. Leaving time out of our portfolio performance calculations is straight up wilful blindness.

Trading Fees: As we lay out in detail, trading fees can and often do have a significant impact on portfolio performance. Looking at your tasty triple digit ‘gain’ in your trading account might feel nice, but when you add up the cost of all the buying and selling it’s taken to achieve that gain, the reality is probably not quite so glorious.

I have a friend who sold some crypto recently and, thanks to my incessant nagging about true performance, accepted that, while they’d made a healthy profit, they’d handed over a huge percentage in exchange and account fees.

Income: This one’s a counterbalance to time and trading fees. If I have a $100,000 portfolio that generates $10,000 in income every year, that’s a massive factor in my overall performance and returns. While my trading account only shows me my capital gains on an investment, my portfolio tracker shows me my total return including dividend income — and breaks down how much of my return constitutes income versus capital gains.

Taxation: Now this one’s a little different. But the reality is — especially for those of us investing with a view to financial independence or early retirement — we must pay a significant percentage of our profits to the government when we sell out of investments. This is important to consider when you’re assessing what you’ll gain from buying and selling stocks. It doesn’t impact your portfolio performance per se, but it does massively impact your financial outcome as you draw down or completely exit a portfolio.

(FYI: Navexa provides automated CGT and income tax obligation reports, plus an Unrealized Capital Gain report to help you assess and forecast your portfolio’s taxes.)

Currency gain is also important, but of course not all of us invest beyond our home markets. In Australia, in fact, the majority of investors doesn’t stray beyond the ASX, although this is gradually shifting as more services arrive to facilitate offshore investing through new platforms and apps.

Another point here is that Navexa’s portfolio performance calculation is money weighted. That means it accounts for inflows and outflows of cash in your portfolio. This is because the reality for many of us isn’t as simple as making an initial investment and leaving it alone. Rather, we buy and sell as we go.

A money weighted return is different from a time weighted return, which doesn’t account for cash inflows and outflows.

How Navexa Tracks Your Portfolio’s Performance With Automated Accuracy

When I set out to build Navexa, I just wanted a tool that would save me having to combine the data in my trading account with my own manual calculations in order to work out my true portfolio performance.

I — like many of the Navexa community — am a long-term, buy-and-hold investor to whom strong, annualized returns matter more than eye-grabbing one-off gains.

I’ve been learning about money and wealth creation for a long time. Everything I’ve learned has taught me it’s far better to work with hard data than skewed or incomplete information about a portfolio.

This is why the Navexa Portfolio Tracker, today, is one of the leading portfolio tracking platforms in Australia. We calculate annualized portfolio performance that accounts for all the factors I mention above.

Once you load your portfolio into Navexa, you start seeing true performance over the long term. You can see at a glance your capital gains, currency gains, investment income — all net of your trading fees.

You can run comprehensive tax reports with a couple of clicks. You can track & analyze more than 8,000 ASX & US-listed stocks and ETFs, plus cryptos, cash accounts and unlisted investments (like property).

And, you can go even deeper, running reports like Portfolio Contributions, which shows you in chart form which of your investments are boosting (and which are dragging down) your overall performance.

Like I said, I’m biased, since I started Navexa. But I wouldn’t have had to — and thousands of satisfied members wouldn’t be tracking with us — were it not for my trading account failing to provide a full and clear picture of my portfolio performance.

Trading accounts are for trading. Navexa is for portfolio tracking. If you’re doing the former, you should, IMHO be doing the latter, too.

Happy tracking — create an account here (zero obligation & no credit card required!).

Tags investing, portfolio, portfolio tracker, stocks

Financial Technology Investing

How Trading Fees Impact Long-Term Portfolio Performance

Post author By Navarre Trousselot
Post date August 11, 2021

Many investors are not aware that trading fees can impact their long term portfolio performance. When you consider that 50 trades a year at $20 a trade becomes $1,000 in fees, you can see how trading fees can become a substantial part of your investment costs.

This post discusses what trading and other brokerage fees are, some common strategies for minimizing their impact, how to calculate the true cost of buying stocks of ETFs, plus a couple of other key ideas around factoring trading fees into a long term investment strategy.

It might be tempting to ignore trading fees and focus only on your nominal gains — the current price of an investment relative to the price you bought it for. But doing so leaves out a key part of the picture.

Many people assume that a flat rate trading fee is enough to cover all their costs. But this isn’t strictly true. Going back to the 50 trades a year at $20 example, on a $50,000 portfolio, the fees equate to 2%. Were you to make 100 trades, that would jump up to 4%.

And that’s just talking about commission on buy and sell trades. It doesn’t take into account other brokerage expenses, like account fees or inactivity fees, for example. Nor does it account for other potentially significant factors, like currency gains and losses.

We’re going to walk you through trading fees — from the basic principles and current market prices in Australia and beyond, to a few specialist examples of trading fees in action. We’re especially going to focus on understanding how these necessary (for the most part) expenses impact long term portfolio performance — which is your actual, ‘real money’ returns as opposed to the nominal gains you might be used to seeing in your brokerage account.

Plus, we’ll show you how Navexa — the portfolio tracking & reporting platform hosting this blog — helps you automatically calculate your portfolio’s true performance net of trading fees and other factors that impact on returns.

Back to Basics: What Is A Trading Fee?

Strictly speaking, trading fees are themselves just one type of brokerage fee.

A brokerage fee describes the various fees you’ll pay to buy and sell stocks through a trading platform or stock broker.

These break down into trading and non-trading fees. The former means charges you’ll need to pay associated with a given trade. That could mean broker commission, margin rate (for borrowed capital) or a currency conversion if you’re trading, for example, US stocks through an Australian portal.

The latter refers to other costs associated with your investment account, for example account opening fees, inactivity fees and so forth.

Trading fees will be calculated either as a percentage of an order’s total value, or as a flat fee (often applying to a range of values, like $20K-$50K, for example).

Generally speaking, the more complicated your investment strategy, and the more different types of assets you invest in, the higher your brokerage fees may become.

Mutual funds, options, futures and other more complex asset classes will probably carry unique fees and fee structures, too.

A mutual fund is often judged in part by its expense ratio. This is the percentage of assets (money) the mutual fund consumes in expenses. You can think of your own portfolio’s investment costs in similar terms — by considering your expense ratio, just as you would a mutual fund.

OK, so given that fees exist and can’t be avoided if you’re investing in the markets, let’s look at how they affect an investment portfolio.

Types of Brokerage Fees

Trading fees: Costs associated with making a trade.
Non-Trading fees: Costs associated with the administration of having a trading account.

The Impact Of Fees On Long Term Portfolio Performance

Take, for example, a 10-year investment strategy.

The investor creates a portfolio with 50 different stocks, ETFs and mutual fund holdings in it.

Each trade, on average, costs $20 — that’s buying and selling.

That’s $1,000 worth of fees in the first year, provided they don’t sell anything.

Every year, the investor adds to existing positions, sells out of underperforming ones, and enters new positions as they shift their capital around trying to optimize the portfolio. But let’s assume the total number of holdings remains at 50.

Let’s say they make a further 50 trades a year — another $1,000 in fees. Over the 10 year period in this example, that’s $10,000. And when it’s time to sell out and collect the cash they’ve (hopefully) earned as their portfolio’s total value has appreciated over that time… that’s another $1,000 for all the sell trades on the 50 holdings at the end of the period.

The impact of fees? $11,000.

If the portfolio had started with $50,000, and we assume a 100% total return over the 10 years (that’s a 7.18% annualized return), the investor has, on paper, doubled their money. Hooray! Right? Not quite.

We haven’t factored the $11,000 in fees into the equation yet.

The portfolio started with $50,000. Ten years later, it was worth $100,000 — a $50,000 ‘gain’ if you don’t look beneath the surface numbers. Minus the $11,000 in fees, that $50,000 ‘gain’ comes down to $39,000.

So that 100% gain comes down to 78%, and the 7.18% annualized return across the decade comes down to 5.94%.

If these numbers are confusing, bear with me. Here’s a couple more that show the impact of trading fees on this theoretical portfolio’s long-term return (remember, nominal ‘gains’ aren’t a real measure of performance).

The trading fees in this case dragged the dollar return of the portfolio down 22%.
The fees account for a 22% loss in total percentage gain across the life of the portfolio.
The portfolio’s annualized performance suffered 17.2% thanks to the fees.

This, in a nutshell is why you need to care about trading fees in the context of assessing your portfolio performance. While it might be more comfortable to write them off as a necessary expense, you risk giving yourself an inflated and unrealistic idea of your true portfolio performance.

In the example above, we’re only talking about a $100,000 portfolio value and $11,000 in fees. For multi-million-dollar portfolios — especially those comprising large numbers of trades and complex investments which may carry higher fees — the impact could be far more significant.

So let’s look at common ways investors try to minimize their trading fees impacting their portfolio performance.

Impact of Fees of Hypothetical Portfolio

100% ‘nominal’ gain actually a 78% real return
Annualized return drops from 7.18% to 5.94%
22% total impact across portfolio’s 10 year timespan
17.2% impact on annualized performance

A Couple Of Strategies To Reduce The Effects Of Trading Fees

Given the fact that brokerage fees can eat into your returns and performance, it follows that to maximize your performance, you should aim to minimize fees.

How do you do this?

Firstly, avoid the most costly mistake of all; being ignorant not just to the necessary existence of trading fees, but of their undeniable (if easy to ignore) impact on your portfolio.

Rather than turning a blind eye to trading fees and focusing only on your nominal gains, it’s far better to arm yourself with knowledge. This is the first step of any fee-minimization strategy.

Secondly, there’s a general rule you can apply to your investing strategy:

Generally speaking, more trades = more fees.

Morningstar reports that investors pay about three times as much in fees when they invest in an actively managed fund as opposed to an ETF.

‘Actively managed’ here means that the fund managers execute plenty of trades in their pursuit of optimal performance for the fund. And guess what? These plenty of trades generate plenty of fees, which get passed on to the fund’s investors.

The same applies to self-directed investing. I have a friend who’s invested in cryptocurrencies. Over about the past five years, she’s traded in and out of different crypto assets as she’s hunted for mythically massive returns, not paying any attention to how much each trade was stinging her in fees.

She’s like an actively managed fund, always making moves as she chases gains, not thinking about her expense ratio!

I convinced her to load her trades into Navexa and we saw very quickly that had she just parked all her money in Bitcoin from the beginning, not only would her capital gains be more impressive (turns out plenty of those sh… smaller crypto assets didn’t go to the moon, crazy right?), but her fees would have been drastically lower.

If you go back to the example I made earlier in this post, 50 trades a year at $20 a pop is of course going to cost you more than doing half that.

Those are two general tactics for minimizing trading fees. There are plenty of others.

Another benefit of being aware of fees and how they’ll impact a portfolio is that you might be better informed when choosing who to trade with in the first place.

With the explosion of low or no-commission trading platforms in recent years, you’re more spoilt for choice when it comes to choosing a broker that’s not going to eat too much of your performance in fees.

While a $10,000 trade costs $29.95 with ANZ, the same trade could cost you a third of that with some of the newer, more competitively-priced platforms.

Knowing the different brokers’ fee structures inside out is a smart way to assess which will suit you best, since you can extrapolate your trading history to get an idea of exactly what the impact of a given broker’s fees might be.

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Takeaways

Build your knowledge of fees and fee structures rather than ignore them
Consider the extent to which your stock or fund investing could be more passive and potentially generate fewer fees
Look at fee structures and your unique investing behaviours when comparing & choosing a broker

What Is A Round Turn Trade And Why It’s Important To Understand Before You Make Trades In Your Account

You might have heard of the term ‘round turn trade’ or ‘round trip trade’.

This is a central idea you should grasp before charging into an investment strategy.

It refers to an investment’s total lifecycle. As we mentioned above, paying the trading fee when you buy a stock is only half the story. You’ll pay again when you sell, too.

The phrase is most commonly used in futures trading, but it applies to regular investing, too.

Say you buy $2000 worth of shares and your trading fee is $20. You sell them at $2500 a year later, incurring another trading fee. Your ‘round trip’ investing in this stock has cost you $40 in fees.

The $500 capital gain is really a net $460 gain — 8% lower net of fees.

Of course, if you’re investing and trading in Australia, your round trip doesn’t end with selling out of a position.

In this example, you’ve earned a capital gain, so you’ll (probably) need to pay tax on that, too.

Taxation isn’t a trading fee per se, but in the context of thinking about your portfolio’s round turn or round trip, it’s important to remember all the factors that will impact your returns.

How To Calculate Your Own Personal Cost Per Trade

Another useful way to incorporate your understanding — end expectation — of fees into your investing is by factoring fees into your trading costs.

Keeping with the previous example, you’ve bought $2,000 worth of shares (call it 500 shares at $4 each). But the cost of buying those shares is really $2020 when you include the fee. When you sell out of the position, you get $2460 back, net of fees.

So while in your trading account it may look like you put $2,000 in and got $2,500 back, those are really just nominal figures that reflect the value of your position at the beginning and end of the trade.

Your real money, round trip start and finish numbers are different.

Not by much, in this example, but still statistically significant — especially when you apply this method across large, long-term portfolios with hundreds or thousands of trades, and other trading and non-trading fees associated with managed funds, margin trading and other potentially costly investment types.

Why Do Some Brokers Have Lower Commissions Than Others, And How Does That Affect Your Investment Returns?

Some call it the ‘Robin Hood effect’, others the ‘race to zero’. However you characterize it, competition in the low or no-fees brokerage space has become hotter than ever.

What began with newer, online-only brokers trying to break into the market and compete with the huge, established players has now embroiled pretty much the whole stock broking space in fierce price wars.

RobinHood, SelfWealth, STAKE and myriad other players in the market have forced the established brokers to compete on price and/or justify their costs with new and more sophisticated product offerings.

Check out our CommSec review to learn more about Australia’s largest broker and the fees it charges.

This ‘race to zero’ is part of a much bigger trend. According to a paper from Columbia Business School, quoted here:

‘The huge change for [trading costs] really came about in 1975 in what people now refer to as May Day. That’s when the regulators abolished fixed-rate commissions.
‘Before May Day, it cost the same amount per share to trade 10 shares as it did to trade 10,000 shares. The brokers would make out like bandits, taking their 2% or so from each trade. I’ve seen estimates that show trading costs have fallen around 80-90% since 1975.’

In other words, it’s never been as cost-effective to invest in the markets as it is today. The rise of online-only trading platforms, micro-investing and the broader mobilization of a new generation of investors means you can now minimize the impact fees have on your portfolio performance more than ever.

Especially if you approach your investing with the correct knowledge and strategy.

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Resources to Learn More About Trading Fees

This Canstar comparison article walks you through some of the lowest cost brokers in Australia.
This article explains the different types of brokerage fees in detail.
This post from Investopedia explains some basic fee minimization strategies.

Navexa Helps You Track Your True Portfolio Performance Net Of Fees

Hopefully, you’re one of those who wants to track your portfolio’s true performance, net of fees, so that you can understand what your real returns are as opposed to the nominal ‘gains’ others might settle for.

If that’s you, we have good news. We’ve created the Navexa Portfolio Tracker to show you your true, annualized portfolio performance net of fees, dividend income, and currency gains & losses.

Whether you’re a relatively passive investor happy to let a managed fund grow your wealth for you (despite potentially higher fees), or you’re taking care of your own research and investing decisions on a stock-by-stock basis, you’ll see your portfolio as it really is in our easy-to-use platform.

You can track, analyze and compare every stock and ETF across the ASX, NYSE and NASDAQ across multiple portfolios.

Plus, you can drill down into the data to more clearly see the trends that matter — which stocks are performing the best (and worst), which holdings are earning the most (and least) income for you, and lots more.

You can test Navexa’s true portfolio performance tracking tools and reports for 14 days free.

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Financial Technology Investing

Fidelity Review 2022: Pros, Cons and How to Trade

Post author By Navarre Trousselot
Post date June 28, 2021

Fidelity is one of the largest trading platforms in the world. This Fidelity review looks at the company’s history, the types of investments it supports, different account types, trading fees, pros & cons, and more.

Welcome to our updated 2022 Fidelity review. Fidelity Investments is one of the outright largest asset managers in the world. Their extensive trading platform not only delivers much in the way of investment opportunities and research with zero commission, but also offers you a couple of powerful benefits which you might not find on other trading platforms.

Established just after World War II in Boston, Fidelity today manages about $5 trillion dollars worth of assets plus another nearly $8 trillion in customer accounts.

The firm was the first big American finance company to advertise mutual funds to everyday investors. The renowned fund manager, Peter Lynch, was their Magellan fund manager between for more than a decade and averaged a 29% average annual return — an outstanding performance which remains one of the best in the history of mutual funds.

Fidelity is a huge, multi-faceted organisation which operates not only the brokerage firm and trading platform we’re reviewing here, but also a retirement planning business, a proprietary investing business and other interests alongside its mutual funds operations. They are a giant of modern American personal finance.

Today though, we’re focusing our Fidelity review on the online investing platform. We’re going to dive into what you can expect as a Fidelity customer, the history of the company, the main reasons people invest on this platform, how to open an account and the various account types available.

Our Fidelity review also looks at the top three pros and cons of trading using Fidelity, explains their trading fees model, and explains why trading using Fidelity or any other online broker might not — despite the wealth of third party research and data on display — give you a complete picture of your portfolio performance.

What is Fidelity And What Does It Offer Its Customers

Fidelity is many things. While we’re just looking at the group’s trading platform and brokerage account in this Fidelity review, it’s important to note that Fidelity is a multinational financial services corporation with many different interests.

Fidelity operates:

A brokerage firm
Several mutual funds
An investment advisory service
Retirement planning services
Index funds
A wealth management business
Life insurance
Securities execution and clearance
Custodial services

Fidelity has also been one of the first major brokers to move into cryptocurrency investing.

On the brokerage front, Fidelity supports nearly 30 million brokerage accounts and approximately 600,000 trades a day. This includes the Active Trader Pro platform.

Its trading clients hold about $8 trillion in their Fidelity accounts.

And with the range and quality of the tools and features with a Fidelity trading account, you’ll soon see why they’re one of the biggest in the world.

Before we get into opening an account with Fidelity or looking at the pros and cons, let’s explain some of the company’s history so you can see how it became what it is today.

The History of Fidelity

Fidelity’s history goes back nearly a century, when a lawyer and businessman named Edward Crosby Johnson II applied for his ‘Fidelity Fund’ approved by the Massachusetts Securities Director.

The Fidelity Fund was the only fund to gain approval in the state during the Great Depression. This fund became Fidelity Investments. Johnson later founded Fidelity Management & Research in 1946, right after World War II.

From there, Fidelity continued to expand and break new ground in the investment landscape.

In the 1960s, they became the first big finance company to make mutual funds investing available to everyday people. Up until then, mutual funds had only been advertised to high income, wealthy people. Fidelity sent direct mail and went door to door to bring a huge new group of investors into the market.

At the end of the 60s, Fidelity started serving customers outside the U.S. with the newly formed Fidelity International Limited. In 1982, they began offering 401(k) products. In 1984, they were one of the first to offer computerized trading.

More recently, Fidelity has continued to pioneer new areas for its business and clients. In 2018, they set up Fidelity Digital Assets so cater to institutional crypto asset custodial services and trading. In March 2021, Fidelity again made a bold move by filing for a Bitcoin ETF with the SEC.

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Why Do People Invest With Fidelity?

When you consider that Fidelity has somewhere in the region of 30 million individual clients — about 10% of the U.S. population — you’d have to say there are a lot of reasons why people choose to invest and trade with them.

Fidelity has a huge range of products and solutions for investors and traders of nearly every size and experience level. They offer mutual funds, stocks and ETFs, options and more. Their trading platform comprises stock screening and research tools, portfolio advisory and wealth management services, and the separate Active Trader Pro — a completely customizable desktop application aimed at active day traders. They also offer the Fidelity mobile app.

Beyond that, Fidelity offers a robo advisor service. And outside of its platforms, also offers extensive mutual funds and retirement planning services.

So across its massive customer base, there are loads of different reasons why people sign up with Fidelity. In the U.S., these customers can visit 140 physical branches, which for some is an important benefit they can’t get at newer, digital-only brokerages and trading platforms.

One particular attraction, for some, is that Fidelity allows customers to elect to manage part of their portfolio, while they allow a professional manager handle the rest. This hybrid management approach offers more flexibility than other players in the market.

Of course, another major reason to trade with Fidelity is their trading fees.

Like many other major North American trading platforms, Fidelity has moved to a low, or no, transaction fee structure. For some of its offerings, the group claims to offer the lowest fees in the industry.

Many stock and ETF trades incur no transaction fee. There’s also no account service fees, late settlement fees or account minimum. Also, unlike other platforms, such as TD Ameritrade, Fidelity sweeps any unused cash in your account into a cash management account with FDIC insurance. This account charges no fees and pays interest.

How To Open An Account With Fidelity

Opening a trading account with Fidelity is pretty straightforward, as you’d expect of any major online trading platform these days.

While they let you open an account the old fashioned way, by printing and mailing a form, you can of course create an account online.

First, you’ll need to select your account type. We’ll explain those below.

Once you’ve done this, it’s a case of standard investment service KYC (know your customer). So have your social security number, residential details and details about your employment handy.

stock and ETF — Opening a Fidelity account is relatively easy.

From there, you just need to complete a few fields with your personal information, and choose your investing and trading preferences.

Fidelity begins tailoring your experience during the registration process by asking you to make selections around your goals and interests — the articles, videos and third party research they’ll direct you to in your account will reflect your choices here, so be sure to take your time with this step.

Then, you can review the information you’ve entered, check everything is correct, go through the terms and conditions — which are all pretty standard for the industry, and which you’ll need to spend a long time on if you want to read them to the letter (full T’s & C’s here).

Once you’ve done all this, you’re good to go. All up, applying online should only take about 20 minutes. If you go old school and lodge your application by mail, you’ll need to wait a few days, possibly longer.

Additionally, if you want to register for international trading once you’ve created your account, you can expect to spend about another five minutes getting your account verified.

Once you’re up and running with your account, you can use the mobile app to trade and receive alerts while away from your desktop.

What Are The Different Investment Accounts Fidelity Offers?

As we’ve mentioned already, Fidelity is huge. As a pioneering brokerage with nearly 100 years of history, today they have a huge number of products and services on offer for a wide range of customers.

The same goes for the types of accounts you can open with them. As you’ll see, whatever your goals or life stage, chances are Fidelity has an account type for you.

Fidelity’s investment account types fall into seven categories. They are:

Investing and trading
Saving for retirement
Managed accounts
Saving for education/medical expenses
Charitable giving
Estate planning
Annuities
Life insurance

Within investing and trading, you have:

Brokerage accounts: Standard trading and brokerage.

Cash management accounts: Fidelity’s FDIC-insured cash accounts carry no transaction fee and pay a small amount of interest on your balance.

Brokerage and cash management accounts: A hybrid that combines the previous two.

Business accounts: A business level account for trading and holding cash.

Fidelity’s saving for retirement account category comprises no fewer than eight different types of account, including simple, traditional and rollover IRA, 401(k) for individuals and businesses, and more.

If you register for a managed account, Fidelity’s professional advisors and robo-advisors will handle your investment portfolio for you, in line with parameters and preferences you set as the account owner.

The education and medical expenses savings accounts include 529 accounts, custodial accounts for investing on behalf of children, health savings and an account designed to help disabled customers and their families plan and save for disability-related expenses.

Other account types include Fidelity Charitable, which lets you claim tax deductions for supporting charity, Trust and Estate accounts in which you can manage trading for these entities, life insurance coverage accounts and a selection of annuity accounts, ranging from retirement saving to immediate and deferred income accounts.

All up, Fidelity offers pretty much every kind of investing account you could imagine ever needing, from trading online virtually right away to planning years and decades into the future using insurance and income services. And don’t forget their more advanced trading offering, Active Trader Pro.

Now, let’s talk fees.

Fidelity trade and account fees are pretty reasonable.

Fidelity Trading & Account Fees: Generally Very Low, But With A Couple Of Exceptions

Like so many large brokers in this ever more competitive digital age, Fidelity has in recent years adopted a low/no fee/commission model. Mostly, anyway.

Across Fidelity’s huge range of platforms and account types, they’ve essentially set up their fee structure to offer little to no barrier to entry for those wanting to get started trading stocks.

While US stock and ETF trades are commission free, you will pay to trade international shares on the Fidelity platform.

On the mutual funds front, Fidelity offers nearly 4,000 ‘free’ mutual funds, which you can trade without paying fees or commissions. On the other hand, many of the mutual funds you can trade with them do incur a fee — up to $75 in some cases. You should also note that despite offering so many free funds (including, of course, Fidelity’s own), you may be charged a sale fee of $49.95 if you sell your shares in that fund within 60 days of buying them.

If you’re trading with leverage, or margin, it means you’re borrowing cash from your broker in order to (hopefully) multiply your potential gains.

If you’re borrowing to invest with Fidelity, you can expect to pay a relatively high interest rate on margin lending — 8.3% for a balance less than $25,000.

The more you borrow, the better that rate gets. If you borrowed more than a million dollars for a trade, for instance, you’d pay 4% interest on that balance.

Of course, with any trading account, there’s potentially a whole host of other fees you’ll need to be aware of. These are called non-trading fees. This is where Fidelity is quite generous.

You’ll pay nothing to open your account, deposit or withdraw money. And they won’t charge you a penalty fee for leaving your account inactive for any period of time, either. There are currency conversion fees if you choose to trade international stocks through the platform, however.

Here’s an in-depth, detailed breakdown of all Fidelity’s fees.

Fidelity packs a massive amount of value into its trading platform.

Fidelity Pros: Huge Variety, Low Fees, Quality Research

There’s a lot to like about a Fidelity account. While we’ve outlined the different types of account you can sign up for above, we’re just going to look at the individual investment account here as we cover a few pros and cons.

Pro #1: Access to a huge selection of stock and ETF investments, mutual funds and more

With a Fidelity account, there’s not much you can’t invest in. Across US-listed stocks, you can buy and sell free from fees and commissions. The same goes for almost 4,000 mutual funds — and, of course, Fidelity’s own mutual funds. You could, if you were happy to stick just to these investments, create a considerably diverse portfolio in your account via these fee- and commission-free investments alone.

Then, of course, there’s the rest; International stocks (Fidelity gives you access to more than 20 markets all up), bonds, options and their other mutual funds and ETFs not covered by their fee-free structure.

Pro #2: Low fees and commissions across much of the range + zero non-trading fees

As we just mentioned, it’s possible to trade on Fidelity and pay zero fees of commissions if you stick to certain products and markets. Not only that, but you won’t pay a cent for opening, closing or leaving your account unfunded or inactive. There’s no account minimum balance. Plus, cash not invested is automatically placed into a FDIC-insured account where it will accrue interest — not a huge amount, but a trading platform that pays anything on your cash account is still a win, especially if you’re holding large amounts of cash for a long period.

Pro #3: A wealth of top-quality research and education resources

Whether you’re working towards making your first ever investment, or you’ve been in the markets for decades already and are well into your investing journey, Fidelity, like its competitor TD Ameritrade, packs a mind-boggling amount of educational and research resources into your account.

If you’re looking for tools to help you analyze stocks and markets, you’ll be pleased to know Fidelity provides:

Stock, Options & Fixed Income Screeners: In your account, you’ll find a host of screening tools for stocks, funds, options, bonds and more. You can use these screeners to filter through the wide range of investments available and narrow down those you want to look closely at. One of these screeners, the Mutual Fund Evaluator, allows you to examine funds’ characteristics and compare them against each other:

funds Fidelity — Fidelity’s stock and fund research tools offer in-depth analysis of potential investments.

40 Tools & Calculators: Budgeting, strategizing, predicting the impact of a certain trade on your overall portfolio performance and balance… the list of tools and calculators available in your Fidelity account goes on, with about 40 available all up.

Research & News: There’s more research and analysis packed into a Fidelity account than you could probably ever hope to digest. They host stock and market research from about 20 top-tier sources, including Thomson Reuters. You can even sort your news sources based on your holdings and stocks you’re watching in your account.

Your account also lets you examine charts using technical patterns, historical and intraday pricing data. Active Trader Pro takes this a step further with more advanced real-time trading data. And, as with most major platforms, Fidelity offers an extensive and quality mobile app experience, too.

Takeaways:

Free to trade US stocks and nearly 4,000 mutual funds
You can earn interest on cash accounts
Packed with research tools

Fidelity Cons: Higher Fees For Certain Services, No Futures, Options

While Fidelity offers a large amount of value across a wide range of products and platforms, there are, of course areas where some customers may find the service lacking.

For the everyday investor — someone looking to research and trade stocks and build up a long-term investment portfolio — Fidelity should deliver more than enough to help you on your way.

But if you’re a more advanced investor or trader who wants access to more complex investment products, you might find you need to look elsewhere for the technology that suits your needs.

Con #1: High Fees In Some Areas May Negate Low Ones Elsewhere

While we consider Fidelity generally a low-fee trading platform, there’s a couple of areas in which they’re not so competitive and, depending on your requirements, this may impact the extent to which the platform could be good value for you.

If you’re wanting to trade beyond Fidelity’s free mutual funds, for example, you’ll pay nearly $50 a trade. Margin interest is also relatively high, if you’re looking to borrow for trading. You’ll need to pay more than $10,000 to borrow $150,000 — which, if your leveraged trade didn’t turn out to be profitable, would negate all the low or no-fee parts of your Fidelity account.

Con #2: No Support For Commodities & Futures Options

Fidelity’s Active Trader Pro provides a powerful service for advanced traders to access the markets with real-time data and an interface they can customize to suit them. However, despite offering this trader-centric part of their service, Fidelity does not currently allow you to use it for trading either commodities or futures options — two investment vehicles commonly used by day traders.

Con #3: Need To Use Different Platforms For Research & Trading

This isn’t strictly a con, given that between the Fidelity trading platform and Active Trader Pro, you can access both large amounts of fundamental data and third-party market and investment research, and an advanced interface through which to make more complex trades.

But, these two sides to the Fidelity platform aren’t integrated. You need to use two different parts of the service to conduct research and carry out trades (this doesn’t apply if you’re happy just using the main platform for stock, ETF and mutual funds investing).

Takeaways:

Some parts of the platform aren’t free/competitively priced
You can’t trade commodities or futures options
Active Trader Pro doesn’t provide fundamentals research

active trader pro — Fidelity’s Active Trader Pro.

Fidelity Customer Support: Comprehensive & Multi-Level

As you’d expect from a massive, long-established broker like this, Fidelity’s customer support is regarded as pretty good.

Depending on your account type, you can reach them through 24/7 live chat, the customer support hotline (800-343-3548). For the best results, try reaching them between 8am and 10pm Eastern Time, and Saturdays from 9am to 4pm.

More recently, Fidelity has upped its social media presence, which you might find useful in resolving any support requirements, too. You can check out their subreddit, YouTube channel, Twitter account and Facebook page.

Verdict: One Of The Most Powerful Brokers For U.S. Customers Of Nearly Every Experience Level

Fidelity Investments regularly tops various publications’ ‘Broker of the Year’ lists. And while there are a few potential downsides to using the platform in some cases (see above), overall this is an investment research and trading platform that delivers quality and value in spades.

Investopedia rates Fidelity 4.5 out of 5 stars, saying they ‘continued to enhance key pieces of its platform while also committing to lowering the cost of investing for investors’.

Brokerchooser awards them a 4.7 stars — ‘it offers plenty of high-quality research tools, including trading ideas, detailed fundamental data and charting. The web trading platform is easy to use, and offers advanced order types’.

Nerdwallet and Stockbrokers award a full 5 stars out of 5 stars, with the latter commenting: ‘Fidelity is a value-driven online broker offering $0 trades, industry-leading research, excellent trading tools, an easy-to-use mobile app, and comprehensive retirement services.’

You can see then — from our review and from the consensus of these leading sites — that Fidelity is a formidable platform with the history, technology, product range, fees structure and research to make it a brilliant solution for investors and traders of different levels.

They wouldn’t have nearly 10% of the US population as customers were they not a proven, reliable and top-quality broker and trading platform.

Before we wrap up this Fidelity review, though, we should mention that, if you are already, or are looking to become, a Fidelity customer, you should consider adding another piece of financial technology to your investing toolkit.

The Navexa portfolio tracker automatically tracks stocks and crypto performance in a single account.

Don’t Cut Corners On Your Portfolio Tracking

One area in which many brokers — even a best-in-class brokerage account like Fidelity — often lack is in their portfolio tracking and analytics capabilities.

While you can load your Fidelity accounts into FullView (Fidelity’s analytics module) to see your asset allocation and portfolio performance, Investopedia reports that it ‘can be slow to load and a little difficult to customize’.

Here at Navexa, we know that correctly tracking portfolio performance is vital to building and understanding your long-term, true investment returns.

See how true performance differs from the numbers you might be seeing in your brokerage account.

Three Things You Should Know About Your Portfolio Performance

Here are three vital things you need to know in order to fully understand the value and performance of a given investment, and your wider portfolio.

1. How much time have you invested to generate a return? Consider that a 100% gain in a year is far more desirable than a 100% gain in five years.

2. How much income have you earned from dividend payments? One stock our founder owns has paid him back 40% of his investment in dividends. This substantially affects how you should view an investment’s performance.

3. How much have you spent in fees? If you’ve been investing for 20 years, making, say 25 trades a year at $20 a trade, that’s $10,000. However much you spend on fees in the course of your trading, you need to factor that in to fully understand your portfolio performance.

How Tracking Your Portfolio With Navexa Complements Your Trading Platform Experience

Our portfolio tracking platform allows you to see not only your portfolio’s true performance after fees, income, currency gains/losses and annualization, but to drill down deep into all the factors affecting your portfolio and its holdings.

You can run a portfolio contributions report to identify which holdings are contributing the most (and least) to your portfolio performance.

You can run an upcoming dividends report to see which income you have scheduled coming from your investments (thanks to official data from the NYSE, NASDAQ and ASX).

You can view your portfolio performance across any date range you prefer, and factor in closed positions (or not) as you wish.

Try Navexa free for 14 days and see for yourself your portfolio’s true performance.

How Fidelity Customers Can Use Navexa To Optimize Their Investment Journey

Our platform is what we like to call ‘broker agnostic’. That means whether you’re trading stocks, ETFs and mutual funds, crypto or pretty much anything else, you can track it all together in Navexa.

Navexa is one of the few tools that allows investors to bring all their trading platform data into a unified analytics and tracking account where they can see their combined investment performance net of trading fees and currency gain.

I’ve personally experienced the power of tracking dividend income on a stock which made me a 100% return in dividends alone, despite not generating any capital gain. So trust me, it pays to track this stuff properly!

Not only does this allow you to see your true overall performance, but it breaks down your performance by capital gains, investment income and different methods of calculation like simple returns and compound annual growth rate.

For Fidelity customers — or those trading with any major US brokerage account — it’s super easy to get started with Navexa’s automated portfolio performance tracking.

Simply upload your historical trade data using our handy portfolio file uploader tool to see your investment performance clearly and optimize your investment journey!

Tags investing, stock market, trading

Financial Literacy Financial Technology Investing

How To Read Level 2 Market Data

Post author By Navarre Trousselot
Post date June 20, 2021

Level 2, or level II, market data refers to real-time access to an additional layer of information about the market’s depth and momentum. If you’re a trader, or you’d simply like to learn more about level 2 market data, this post explains how it works, how to interpret it, and demonstrates level 2 market data in action.

Imagine knowing how many traders were placing orders in a stock before those orders were fulfilled. Imagine knowing the sizes of those orders, the speed at which buyers found sellers for them, and the prices of not only the highest and lowest buy or sell order, but the prices of 10 or more at any given time.

In other words, imagine having a lens through which you could see a stock’s liquidity, supply and demand in real time, before the rest of the market found out.

Welcome to the world of level 2 market data.

Level 2 market data is the realm of the trader. That’s because the information it provides gives the traders a clearer picture of a stock’s supply at demand and a variety of price levels.

This post is going to walk you through why this data exists, how to read the information on a level 2 quote screen and the reasons you might want to.

We’ll also show you a couple of examples of level 2 quote screens and share some tips on reading and interpreting them.

Plus, we’ll share some great resources where you can find out more, and introduce our powerful online tool we recommend using to track, analyze and report on your trades and portfolio, regardless of whether you’re a buy-and-hold investor or an active trader using level 2 data to research stocks.

Before we continue, an important note: This post is not intended to be financial or investment advice. It is general information only and we recommend that you do your own research and/or seek professional advice before risking your money on an investment — regardless of whether you use level 1 or level 2 data!

Now, let’s get into it.

What Is Level 2 Market Data?

To understand level 2, or level II market data, first let’s look at level 1.

The more basic of the two types, level 1 market data generally provides the following information;

Bid price: The highest price a buyer is willing to pay.
Bid size: The amount traders are looking to buy at the bid price.
Ask price: The lowest price a seller will sell for.
Ask size: The amount traders are looking to sell at the ask price.
Last price: The price of the most recent trade.
Last size: The amount of shares that most recent trade was for.

This level 1 data provides plenty of intel for most traders — particularly those using trading strategies based on price action — to make decisions around what, and when, they’re going to buy or sell.

You can think of level II market data as an expanded version of level I.

With level 1, the bid price and ask price information refers only to the highest and lowest prices, respectively. But with level II market data, you’ll see multiple high bid prices — five, 10 or more, depending on the exchange you’ve bought the data feed from.

It’s the information on the bid and ask prices that sets this data apart.

Similarly, you’ll see multiple bid and ask sizes related to those prices.

In other words, level 1 shows you only the extremes of a stock’s trading behaviour — the upper and lower levels at which traders are buying and selling, plus the quantities.

Level II gives traders a clearer picture of what’s going on with a stock because they can see a larger chunk of the trading action — more trade prices and sizes, and more importantly, more information on the difference between what’s happening at the upper and lower prices of current trading activity.

Sometimes you’ll hear level II market data referred to as ‘the order book’. That’s because you won’t just see orders that have been filled already, but also orders that have been places and are yet to be filled.

This is another layer of insight in that you can watch how long a given order takes to be filled. In other words, how long the market takes to pounce on a buy or sell order at a given price.

TL;DR: Level 2 market data shows you more of the buying and selling action than the more commonly used level 1 data — including orders that haven’t yet been filled.

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How To Read The Information On A Level 2 Quote Screen

So now you know what sort of information level 2 market data shows. What about how you’re supposed to interpret that information in your stock analysis and trading?

There are four key insights you can gain through the information in a level 2 quote.

They are: Market depth, liquidity, timing and bid-offer spread.

Market depth expresses the measure of supply and demand for the stock. By checking the quantity of the open buy and sell orders, you can get an idea of how ‘deep’ the market for this particular stock might be.

Liquidity is closely related to market depth. It’s the measure of total buys and sells and, crucially, how fast those orders are fulfilled and replaced by fresh ones.

The level 2 market data can help traders looking to time their buying and selling by revealing a stock’s market depth and liquidity. If you can see there’s plenty of buyers and sellers placing and fulfilling orders at a fast pace, you can decide when might be the best time to make your own trade.

The bid-offer spread is the difference between the price you can sell the stock and the price you can buy it (the bid and ask prices).

The difference between these prices (and remember, in level 2 market data, can see more than just the highest and lowest prices) is known as the spread. Generally speaking, the smaller a stock’s spread, the more liquid you’d consider it.

TL;DR: Level 2 quotes show you a stock’s depth, liquidity and bid-offer spread.

Why Do I Need To Know How To Read Level II Market Data?

Strictly speaking, you don’t need to know how to read level II market data to trade stocks. As we mentioned, this type of data is an additional layer on top of the level 1 market data most everyday traders have access to on their trading platforms.

It’s not essential to have access, or to know how to interpret it in order to invest and trade.

But if you’re an active or advanced trader, using a trading strategy that hinges on intra-day data — or that requires leverage (borrowing money) — you may find that the additional information in level 2 market data benefits you.

This is particularly true if you find additional data on bid and ask prices useful, or if you want to get an idea of who the market makers are for a stock (more on market makers below).

If, for example, you’re trading with a few thousand dollars as a hobby, you might not benefit from seeing level 2 quotes for stocks you’re interested in.

But, if you’re looking to deploy, say, $500,000 into the market with the objective of making quick profits from small price movements, then level 2 market data might help you get an edge in your trading.

TL;DR: If you’re trading frequently and/or with leverage, having access to this additional layer of information about a stock’s price action may be valuable.

Example Of Reading A Level II Quote Screens

Here’s an example of a level 2 market data quote screen:

At first glance, this might look like a confusing collection of raw numbers.

Let’s break it down. The top section shows you an array of information about the stock this quote is for — easyJet.

You can see the ticker symbol, the latest closing price, and a selection of current information like the last price shares changed hands for.

In the top section you can also see ‘buy depth’ and ‘sell depth’. These numbers refer to the liquidity on both the demand and supply side of the current trading.

Below that, you can see two tables containing the latest buy and sell orders. These tables are mirrored, so the outside column of each shows you the time of the order, the middle column shows the quantity and the inside column the price of the order.

Tips For Using Level 2 Quotes

Using level 2 market data in your trading means you get access to a wealth of additional, real-time information about the market for a particular stock. You’ll be able to make more accurate judgments of liquidity and order sizes on both the buy and sell side.

But, one thing to be aware of with this type of data is that things aren’t always what they seem.

Key to this is the types of market participants you’ll see in a level II quote.

There are three types of market participants you might see in a level 2 quote. They are the market maker (the market maker is the one who dominates the price action, doing the most buying and selling), electronic communication networks or ECNs (the order placement systems through which people place their trades), and wholesalers (some online brokers and platforms sell their orders to a wholesaler who executes orders for them).

Market makers will sometimes hide their order sizes so as not to tip off the market about their appetite for a stock. Rather than placing one large order, market makers might place several small ones — or trade through an ECN so that you can’t see who’s behind the order.

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Resources For Learning More About Level 2 Quotes

The world of level 2 data is more complex than the more widely used market data and stock analysis you might be used to.

To learn more about how the information in a level 2 quote might be indicative of future price action, here’s a few resources worth checking out:

Analyzing a stock using level 2 data could give you insights into liquidity, bid and ask prices, and spread, which may be indicative of trend changes.

If you’re going to go so far as to subscribe to level 2 data, there’s something else you should make sure of, too.

Whether you’re using level 2 quotes to analyze stocks you’re considering trading, or you’d prefer to buy undervalued companies and hold them ‘forever’ like the great Warren Buffet, you must ensure you correctly track your investment portfolio performance.

Also Check Out: How To Use The Zig Zag Indicator To Read Charts

Understanding a stock’s trend is a vital part of trading, and a key focus for technical analysis.

The zig zag indicator is a basic technical analysis tool you can use to determine whether a stock is trending up or down.

This indicator is one of the more simple tools used in technical analysis — the discipline of analyzing charts to make predictions on future price movements.

Discover the zig zag indicator formula is and the basics of how to calculate and use it in your investment analysis.

How The Navexa Portfolio Tracker Helps You Track, Analyze & Understand the Stocks, ETFs and Cryptos In Your Portfolio

Here at Navexa, we’re in the business of creating tools to help self-directed investors better understand their investment portfolio.

Regardless of whether you’re a long-term, buy-and-hold investor who prefers ETFs to stock picking, or you’re an active trader using a specific system to chase profits on a weekly or daily basis, Navexa’s portfolio tracker is designed to track your true performance.

When we invest and trade, we often just focus on stock prices and returns.

But the fact is that there’s many more factors that impact how much money we actually make, or lose.

This is why we’re created a platform that accounts not just for annualization (your average annual return over the whole time you’ve held an investment), but also for trading fees and income (two commonly overlooked but very important factors we sometimes leave out when we analyze our portfolio performance).

Trading and investing properly requires that you properly track and understand the impact of your trades and investments over the long term, in real money terms.

That’s why you need to portfolio tracker that calculates your true performance for your portfolio and the holdings in it.

True performance is different from the simple ‘gain’ you’ll see in your trading account.

It accounts for how long you’ve held a position, trading fees, currency gain and dividend income.

The portfolio tracker we run here at Navexa does all this (plus, you can generate a variety of reports, from diversification to portfolio contributions, and many more).

You can track ASX, NYSE and NASDAQ-listed stocks and ETFs, plus cryptocurrencies using official exchange data.

Try Navexa free today and see for yourself what your portfolio’s true performance really is.

Tags stock market, trading

Financial Technology Investing

Our TD Ameritrade Review: How To Get Started, Pros & Cons, And More

Post author By Navarre Trousselot
Post date June 13, 2021

Our TD Ameritrade review covers key pros and cons of trading with one of North America’s most powerful platforms, how to open an account, transaction fees, how to use the variety of research and education tools on offer, and more.

Welcome to our TD Ameritrade review. This (rather long) article dives deep into the TD Ameritrade platform to give you a clear picture of the service’s extensive history and details on:

The TD Ameritrade platform, service and offerings
How to open your own TD Ameritrade account
Pros and cons of using TD Ameritrade
How to decide whether TD Ameritrade might suit your investment needs
And more!

As one of the largest online brokerage platforms on the planet in its own right, TD Ameritrade was acquired in October 2020 by Charles Schwab.

This huge merger with Charles Schwab will probably take several years to complete. So, for now, we’re reviewing TD Ameritrade as a standalone platform.

If you’re investing in stocks, mutual funds, options or even Bitcoin futures contracts, TD Ameritrade has a variety of services you might find useful.

The best way to describe the trading platform is as a full-service investment services provider.

Whether you’re just starting out as an investor, or you’ve been in the markets a long time, or even if you’re running an investment fund or managing client’s portfolios, TD Ameritrade is a powerful, far-reaching trading platform that offers products and tools that will likely support you in your investing mission.

The service isn’t just focused on facilitating trading and investing. Like CommSec, TD Ameritrade has invested heavily into the education and guidance side of its service. Chatbots, seminars, articles, slideshows and other educational content and tools are packed into the platform to enable investors of all levels to learn and improve.

TD Ameritrade even offers a virtual trading simulator so you can practice trading with a notional $100,000.

We’ll come back to these features later in our review. Plus, we’ll walk you through opening an account, using the platform, potential pros and cons of using TD Ameritrade and more.

Also, we’ll show you how using this powerful portfolio tracker alongside your TD Ameritrade (or other) trading account can enhance and enrich your understanding of your investment portfolio’s true performance.

What Is TD Ameritrade And What Do They Offer

TD Ameritrade traces its history back to 1975, when four partners opened First Omaha Securities, Inc. in Nebraska.

In 1983, that became Ameritrade Clearing, Inc. Five years later, they introduced the first telephone trade order system. In 1995, they became the first to offer electronic trading.

From there, the group acquired multiple businesses to become a digital-focused trading service. The ‘TD’ in their name comes from their 2006 merger with Toronto-Dominion Bank’s US brokerage business, TD Waterhouse.

TD Ameritrade’s tech focus continued. They are the first company to advertise on the Bitcoin blockchain. As of October, 2020, they’ve been acquired by another huge North American brokerage, Charles Schwab Corporation. Whether the Charles Schwab merger changes much about the platform remains to be seen.

TD Ameritrade offers its electronic trading platform for customers to trade stocks (common and preferred), futures, ETFs, cryptocurrency, foreign exchange, options, mutual funds, fixed income investments and even carry out margin lending.

The company has more than $1.3 trillion on its platform across about 11.5 million accounts.

On average, it supports nearly 900,000 transactions every day and generates approximately $6 billion a year.

The platform offers a large range of services and access to a many different types of investments.

There’s the TD Ameritrade platform itself and the sophisticated active trading service they acquired in 2009, thinkorswim.

Both these sides to the platform are available on web and mobile.

TD Ameritrade offers a large variety of account types.

TD Ameritrade Account Types

Standard accounts
Retirement accounts
Education accounts
Specialty accounts for trusts, partnerships and more
Managed portfolios
Margin trading

Depending on your account type, you’ll have access to a wide range of investments across the web and mobile platforms.

While you can’t directly trade cryptocurrencies (only Bitcoin futures), you can trade pretty much everything else.

What You Can Trade on TD Ameritrade

Stocks (long and short selling, plus over-the-counter penny stocks)
Mutual funds (nearly 2,000 of them)
Bonds (corporate, municipal, treasury, contracts for difference, plus international fixed income and even junk bonds)
Options
Futures
Foreign exchange
Unit investment trusts

Also central to the TD Ameritrade offering is that, unlike some other ‘traditional’ brokers, they’ve recently moved to a low or no-fees model. In 2019 they reduced most of their online trade commissions to zero — meaning you can trade many assets and instruments on the platform for a low fee and pay nothing on your returns.

This brings TD Ameritrade in line with the growing low fees movement driving newer investment platforms into the market.

It also means you can access one of North America’s most powerful investment platforms more cost-effectively than ever before.

So, you’re interested in signing up? Here’s how it works.

How To Open An Account With TD Ameritrade

Opening a TD Ameritrade account is about as simple as you’d expect with any major North American broker.

You can expect the standard know-your-customer protocol.

To create an account, you’ll need either you Social Security number or your Individual Taxpayer Identification Number.

Plus, you also need to provide your employers’ name and address.

The whole process should take a few minutes.

First, you’ll need to select your account type.

The signup wizard provides questions and prompts through the process to ensure you register the right account type for you.

Once you’ve confirmed this, you’ll need to enter your personal information.

Then you’ll need to spend a little time reviewing the technical information and terms of your account. This stage includes selecting how you wish TD Ameritrade to treat your cash account — it can go into either a FDIC-insured deposit account or a SIPC-protected TD Ameritrade account.

You’ll also need to review some IRS-related questions here.

Once you’re satisfied — and they’re satisfied — with your information and selections, you’ll need to create your secure login details for your account.

Once you’ve set your password and user ID, TD Ameritrade activates your account and you’re good to go. From here you can fund your account and start trading. You’ll see your official TD Ameritrade account number once you’ve completed the process.

There’s no minimum amount you need to fund your account with to begin. Though if you’re looking to trade options or do margin trading, they require you to fund your account with at least $2,000.

Pros And Cons Of Using TD Ameritrade

The TD Ameritrade offers an extensive platform that is powerful and — aside from a 2007 hack, in which customers’ details were compromised and circulated on the dark web for several years — largely secure.

TD Ameritrade offers a range of security products, procedures and an asset protection guarantee to protect you from your trading account or personal information being compromised.

As such large trading platform, there are plenty of pros and cons to be debated.

We’ll look at three of each.

TD Ameritrade Pros

Huge array of trading tools and investment options: From the website and mobile versions of both the TD Ameritrade trading platform and its sister active trading platform, thinkorswim, to the number of different things you can invest your money into (from stocks to options and even junk bonds, plus the huge range of mutual funds), the platform gives you a high level of access to the markets. Plus, you have the TD Ameritrade mobile app, and other associated mobile tools.

First-class research and education resources: TD Ameritrade offers you plenty of knowledge in the form of reports, presentations and even an portfolio simulator so that you can progress from beginner to novice, or novice to advanced.

Low fees, high standards: Being one of the more established ‘traditional’ brokers in North America hasn’t stopped TD Ameritrade offering progressive pricing. While you might expect zero fees and commissions from smaller, newer trading platforms like Robinhood, you’ll be pleased to know that TD Ameritrade offers no fees to open an account or trade stocks. They also offer all ETF trades and more than 4,000 mutual fund trades with zero commission.

TD Ameritrade Cons

Information overload: The flipside of TD Ameritrade’s platform being so vast and powerful is that it makes it less than simple for beginner investors or those new to the platform to navigate. With such an array of investments, account types, and a fully customizable trading dashboard packed with information, the chances of overwhelm are high. This may deter you if you’re just looking for a simple platform on which to buy a couple of ETFs.

Occasional outages: The platform had a couple of outages in late 2020, reportedly due to heavy trading volume. This issue apparently prevented users from logging in and/or making trades. This isn’t strictly a con, since even the most robust platforms can suffer occasional outages, but it’s something to be aware of.

No fractional shares, penny stock commissions: If you want to invest in Amazon, but you only want to invest $1,000, you won’t be able to do so on TD Ameritrade. While competitors like Fidelity do cater for fractional share investing, at this stage, Ameritrade does not. Another thing you’ll find is that while many of the platform’s available investments give you zero-fee and zero-commission access, over-the-counter penny stocks do incur a $6.95 commission. And since fees can be a significant factor in your true portfolio performance, it’s important to know this if you’re looking for a trading platform that allows you access to the small and micro-cap end of the stock market.

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The Best Way To Use TD Ameritrade For Your Needs

There’s so many different investment vehicles, account types and tools packed into the TD Ameritrade platform that we’d be here all day if we listed every way you could use it for your needs.

Let’s look the basics of making a trade.

Making a trade

Once you’ve set up your account and moved some funds into it for trading, you’re ready to get started.

You can see from the screenshot below how much information is on the trading account homepage alone.

To make a new trade, hit the ‘Trade’ button along the top navigation bar.

This will bring up a new screen in which you can select between stocks and ETFs, options and more.

From here it’s a pretty self-explanatory process, similar to most other trading platforms.

Here’s an example of the options trading screen.

In this example, you look up the ticker symbol and set the various fields to your preference for the trade. Then, click review order. You can also opt to save the trade details for later, which is useful if you want to go away to do some further research before locking it in.

Also near the bottom of the screen you’ll find the SnapTicket. This is TD Ameritrade’s tool for getting quotes and actioning trades. You can open a SnapTicket and it will display no matter where on the platform you navigate.

Using TD Ameritrade for Research

As well as being a powerful tool for buying and selling a multitude of investments, the platform gives you an equally impressive range of research tools and resources.

TD Ameritrade’s stock screeners are completely customizable. If you don’t want to customize, you can choose from nearly 100 preset options. You can also access screening tools for ETFs, options, mutual funds and fixed income.

Plus, through both the TD Ameritrade portal and the sister thinkorswim trading platform, you can access a huge amount of calculators, news, charting tools, trading ideas and third-party research from some of the most respected firms in the world.

While there may be a risk of information overload thanks to the sheer volume of data and tools at your disposal, if you know what you’re looking for and you know which information will suit your research best, chances are you’ll find it in the TD Ameritrade platform.

Using TD Ameritrade For Analyzing And Tracking Your Portfolio

If you’re familiar with the importance of asset allocation, you’ll know that buying and selling investments is just a part of a much bigger picture.

Being able to zoom back from stock-by-stock analysis and performance, and focus on your overall, long-term portfolio performance is key to a solid investment strategy.

The platform’s Portfolio Planner tool shows you your asset allocation and allows you to compare that to a target allocation for a theoretical portfolio.

If you have a particular pre-defined asset allocation or portfolio management strategy you’re seeking to follow, you’ll be able to add this into your Portfolio Planner and get specific recommendations on which stocks may be a good fit.

This is a valuable tool — one that goes beyond just facilitating trades and allows you to pair your research and investing with a broader, longer-term strategy.

There’s so much packed into TD Ameritrade and thinkorswim (which deserves its own independent review) that we can’t cover everything here.

Your needs for a trading platform will be unique to your individual goals and risk tolerance. But based on the scale and depth of TD Ameritrade’s platform, its likely you’ll be able to find the right combination of assets, research and tools to fit your investing strategy.

Should You Consider Opening An Account With TD Ameritrade?

According to StockBrokers.com, TD Ameritrade is not only the best overall stock broker in U.S., they also rank first for active trading, tools and platforms, and education.

The platform itself makes the bold claim that by joining, you’ll grow smarter with every trade you make. And going by the amount of account types, investing options, and tools for research and education, you’d have to say that TD Ameritrade is in a strong position to make that claim — provided, of course, you understand how to use these tools and interpret the data and analysis these resources generate.

According to this TD Ameritrade customer:

‘If I started from scratch and had to find a new broker today, these would be the key requirements I’d look for:

No Minimum Deposit Requirement
Low Transaction Costs
Commission Free ETFs
Great Research Tools
Easy to Use Trading Platform
Great Customer Support
Easy Tax Reporting’

TD Ameritrade, of course, boasts all these. As the customer points out, the quality and depth of the research tools especially would justify paying more in trading fees and commissions than you might with a competitor platform.

But since 2010, TD Ameritrade has — unlike some of the other big, established trading platforms in the North American market — been aggressively generous in its offer of low or no fees and commissions. This is particularly true of their extensive ETF offering.

So on this basis alone, you should consider signing up with the platform since there’s enough tools and resources to support you whether you’re a beginner investor looking to learn about the markets, an advanced trader who’s seasoned at using stocks, bonds, options and leverage, or pretty much anything in between.

But as we’ve touched on in this TD Ameritrade review, the platform and the organisation behind it has either pioneered — or acquired — so many different services for the modern investor that no review is going to be able to cover everything.

But one thing worth mentioning here is TD Ameritrade’s customer support.

According to the customer we quoted before:

‘Help is easy to come by with phone, email, online chat, in person at a local branch, and the easy to use Ask Ted feature… the educational tools available, and the little help center buttons in all the right places… will walk you through the basics.

On top of that, I get a couple of phone calls every year from the local TD Ameritrade branch. They just check in, see if I have any questions, concerns, and how they can help.’

In other words, if you have any issues with any aspect of your TD Ameritrade account, there’s multiple ways you can access support and assistance.

Of course, only you can decide whether signing up is right for your specific requirements.

But, in short, you should consider signing up to TD Ameritrade if:

You want access to a huge variety of investment vehicles, from regular stocks through to options and margin lending.
You value in-depth research and educational resources to help improve your financial literacy and skill as an investor.
You want the support of trading with one of the biggest (and soon, thanks to the Charles Schwab acquisition, the biggest) trading platforms in North America.
You want to minimize the impact of trading fees and broker commissions on your investment portfolio.

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How To Get Started Trading Stocks, ETFs, Mutual Funds, Options, Bonds Or Futures Through TD Ameritrade’s Online Brokerage Services

Whatever level of experience you’re at right now — be it embarking on your investing journey or looking to start making more complex trades with futures and options — TD Ameritrade has gone to great lengths to provide to resources to get you started.

If you’ve never traded a single stock before, this is a good place to start. This is TD Ameritrade’s introduction to the world of stock investing.

Here, you’ll find the basics. From the definition of a stock, introductions to common approaches to investing in stocks, a short glossary covering five key terms you should be familiar with before getting into the market (read a more extensive glossary and explanation of stock trading strategies), to a quick guide on setting up an account, this page is a good place to get started — especially if you already know you want to sign up to TD Ameritrade.

Like we’ve said, though, there’s a massive amount of resources on the platform to support investors of every level in building their financial literacy and understanding of the markets.

If you sign up, you’ll have access to TD Ameritrade’s Immersive Curriculum. This is a free online course that curates a series of courses based on your experience level and account setup choices.

Some of the courses available:

Simple Steps for a Retirement Portfolio
Stocks: Fundamental Analysis
Income Investing
Stocks: Technical Analysis
Trading Options
Options for Volatility
Weekly Options
Fundamentals of Futures Trading

This curriculum means that even if you’re not ready to start trading stocks, or options, or futures, or even to start analyzing potential investments using a particular methodology, you can still get great value from the TD Ameritrade platform.

While other brokers and trading platforms might make empty promises about supporting their customers and furthering their knowledge, the same can’t be said about TD Ameritrade. Their resources and support for investors of all levels is extensive and impressive — particular the way the above courses can be tailored to your particular requirements.

A TD Ameritrade account gives you access to three separate (but connected) platforms. There’s the main web platform for the trading account, the associated TD Ameritrade mobile trading platform, and the elite, active-trader level platform, thinkorswim, which you can see below.

Thinkorswim comes with a downloadable desktop application, a web platform and a mobile app. So really you can access up to five different platforms between TD Ameritrade and thinkorswim.

Another cool feature is that the trading platform app has been optimised for the Apple Watch, meaning you can moniter watchlists, stock quotes and market data from your wrist.

Based on TD Ameritrade’s large list of investment offerings — stocks and ETFS, mutual funds, bonds, options and more (most with low or no fees and zero commission to trade) — and its extensive research and education resources, this platform will probably be a good place to start your investment journey.

In our opinion, any trading platform that invests this much in helping its customers strengthen and deepen their knowledge of investing is worth exploring.

Paired with the scope and power of a platform as expansive as TD Ameritrade, that quality becomes even more beneficial.

**Trading With TD Ameritrade? Make Sure You Track Your True Portfolio Performance**

This TD Ameritrade review has, we hope, shown you that it’s a platform that can offer investors of traders of nearly every level a powerful suite of tools and resources.

We especially like the asset allocation module, with its model portfolio options and associated investment recommendations.

One area in which TD Ameritrade lacks a little is in its true performance portfolio tracking capability.

You can, of course, easily see how your investments are performing.

This is what your portfolio looks like in their platform:

In this example, you can see each holding’s dollar value and percentage return. You can also see the relative weighting of each in your portfolio on the coloured pie chart.

For such a sophisticated trading platform, this is a very basic level of portfolio insight.

Let us explain.

The rise of self-directed and so-called ‘democratizated’ investing — in which TD Amertrade is playing a part by offering such valuable trading tools and investment education resources with such a low barrier to entry — has more people entering the market and trying to build wealth.

But what many investors are forgetting — or or just plain aren’t aware of — is that there’s a difference between a portfolio’s gains and its true performance.

Your trading account often only shows you how much money you’ve put into your portfolio, and how much you’ve gained or lost. You can see in the screen above that there’s no data or metrics reflecting how long those holdings have been in the portfolio.

Consider this. If you had to choose from two investments which would both gain 100%, but one took half the time to do so than the other, which would you choose?

That’s a no brainer. Because when you annualize those returns, the one that took half as long to reach that gain has actually performed twice as well.

This is the problem with the nominal gains and returns you’ll see in a trading account like TD Ameritrade.

They’re only a part of the full financial picture you need to see.

The reality is that time, income, trading fees and other factors play a significant role in determining your real returns and true portfolio performance. This is true for even the smallest, shortest term investment. And it’s especially true for long-term strategies.

Three Things You Should Know About Your Portfolio Performance

Here are three vital things you need to know in order to fully understand the value and performance of a given investment, and your wider portfolio.

1. How much time have you invested to generate a return? Consider that a 100% gain in a year is far more desirable than a 100% gain in five years.

2. How much income have you earned from dividend payments? One stock our founder owns has paid him back 40% of his investment in dividends. This substantially affects how you should view an investment’s performance.

If you’re thinking of joining TD Ameritrade, we strongly recommend you sign up with a dedicated portfolio tracking platform like Navexa, too.

We believe that in the most connected and data-rich era of financial history, there’s no excuse for not knowing the exact details of every dollar going into and out of your portfolio.

The truth is that there’s are many more things impacting your portfolio than just whether or not the investments in it have gone up or down this week or month.

This is why we developed Navexa. It’s a portfolio tracker that accounts for every factor impacting your investments — time, income, fees and more.

If you’re using a TD Ameritrade account, use a Navexa account to dive even deeper into your portfolio performance data and analyze holdings across the NYSE and NASDAQ.

You can generate a variety of reports, including upcoming dividends (great for forecasting what income your portfolio is scheduled to generate), portfolio diversification, portfolio contributions, and more.

Open a Navexa account (free).

Tags investing, stock market, trading

Financial Literacy Investing

The Zig Zag Indicator Formula — What It Is And How To Calculate It

Post author By Navarre Trousselot
Post date June 4, 2021

Understanding a stock’s trend is a vital part of trading, and a key focus for technical analysis. This post explains what the zig zag indicator formula is and shows you the basics of how to calculate and use it to identify price trends.

The zig zag indicator is a basic technical analysis tool you can use to determine whether a stock is trending up or down.

This indicator is one of the more simple tools used in technical analysis — the discipline of analyzing charts to make predictions on future price movements.

In this post, we’ll explain:

· How the zig zag indicator works to identify price trends

· How to calculate the formula

· The potential benefits

· Some potential limitations

Plus, we’ll share some examples of technical analysis using the zig zag formula, and other key data you should be looking at for both individual stocks you own and your portfolio as a whole.

This post will give you a good overview of the zig zag indicator and how you can use it to better understand and determine price movement.

It is not intended as financial advice, and we always recommend you do your own research and/or consult with a financial professional before risking your money on an investment.

What Is The Zig Zag Indicator And How Does It Work

The zig zag indicator is part of the discipline of technical analysis.

Technical analysis involves interpreting historical data about a security from its price chart in an attempt to determine a pattern, which in turn might give you an idea of where the price is likely to go next.

Traders use the zig zag indicator specifically to eliminate the ‘noise’ of day-to-day market conditions and price movement, and get a clear picture of whether a security’s trend is reversing.

The zig zag indicator allows you to make points on a price chart wherever the price reverses by more than a given percentage. The most common percentage threshold for selecting these points is 5%.

So for every instance on a chart where the price shifts from either down to up, or up to down, by more than 5%, you make a point.

Once you’ve found all the points that qualify on the chart you’re looking at, you draw lines between each adjacent point.

Take a look at an example.

The zig zag pattern this creates shows you all the significant changes in trend on the price chart.

By showing you only the trend reversals greater than 5%, the indicator helps you to focus only on the significant ones (which may be useful to you in predicting the next likely trend change) and not on the smaller, less consequential fluctuations.

These significant turning points are known as swing highs and swing lows.

It’s important to know that the zig zag indicator cannot predict future price trends or price movement. Advanced traders use the indicator with both Elliot Waves and Fibonacci projections in predicting likely future price movement.

For the everyday investor, however, this indicator can still be a useful tool in getting a clearer picture of a stock’s past behaviour, volatility and support or resistance levels.

How To Calculate The Zig Zag Indicator For A Stock

Calculating your zig zag indicator is simple.

First, select a starting point. Looking at a historical price chart, you’ll need to determine how far back you want to analyze. Choose a swing high or swing low.

Then, decide which percentage of price movement you want to set as your threshold. Most zig zag analyses use 5%.

Once you’ve set the percentage, find the next swing high or swing low that qualifies by being over that amount relative to the starting point and mark it on the chart.

Draw a trend line (the zig zag line) between the two. Then repeat the process from this new point to the next one.

Remember to calculate the percentage change relative to the previous point.

Repeat this process until the last swing high or swing low on your chart.

Once you’ve completed the process, you’ll see something similar to this:

Now, you can see the significant swings in the stock’s price — not every single change.

At the right hand side of the chart above, you can see the trend line continues right to the Y axis.

If this chart were up to date, you’d be able to confidently say the stock was currently trending upwards.

You could continue analyzing it day to day — or hour to hour if you’re an active trader — until you identified the next swing high or swing low point, allowing you to potentially exit a trade before the price fell further.

Zig zag Indicator Main Points

Calculate the points at which the price reverses by more than a minimum percentage.
Rule straight lines between each adjacent point.
Add further trend lines and analyses overlays to augment the zig zag indicator with other technical trading tools.

More Examples Of Stocks Analyzed With The Zig Zag Indicator

Overlaying the zig zag indicator onto a price chart helps you to see more simple trends and patterns in what can be confusing collections of noisy information.

Finding the points and plotting the zig zag between them is only part of the process for many traders, though.

Take a look at this chart:

You can see the zig zag line in green. And you can see two more lines, in black.

The trader here has drawn these by ruling along the upper and lower points on the chart.

These black lines show resistance and support levels. Resistance and support are central ideas in technical analysis and trading.

Resistance is the price at which an uptrending stock is will likely pause before breaking through due to supply levels. Support, on the other hand is the opposite — the price at which a downtrending stock will likely pause due to demand levels.

In other words, a stock might struggle to get beyond a certain price because many investors will sell at or near that price. Conversely, it might struggle to fall below a certain price because investors will try to buy around that price.

Moving averages and trendlines — like the zig zag indicator — are key tools traders use to determine these levels, as you can see above.

Using The Zig Zag Indicator To Spot Trends & Breakouts

Now let’s look at another example of the indicator at play in a chart.

In this example, the trader has not only added support and resistance levels based on their zig zag trendline. They’ve also made notes of trends and breakouts.

When a stock price passes a support or resistance line, it can be said to be ‘breaking’ higher or lower.

You can see in the lower left part of the chart the note ‘price breakout’. This shows you where the trendline has passed the resistance line, indicating a new break higher.

After breaking higher, there’s a flurry of new swing highs and lows, which the trader has annotated with new resistance and support lines and the note ‘prices in an uptrend’.

These are just two examples of how the zig zag indicator can be useful in the technical analysis of a stock price chart.

The Benefits Of Using This Type Of Analysis In Your Investing Strategy

The zig zag indicator has several potential benefits. But they only apply if you’re confident with using technical analysis in your investing or trading.

If you’re more of a passive investor (someone who’d rather put their money in an ETF and leave it alone for a long period), or, say, a value or fundamental investor, the zig zag indicator might not be useful to you.

Here are three potential benefits to using it:

1. Block out noisy short-term price movements and see the significant ones: It can be easy to get caught up in every single price move a stock makes. But not every move demands you buy or sell. Even the best performing investments probably won’t go up every single day. By using the zig zag indicator, you can focus on the meaningful swing highs and lows — the points at which the price really changes direction, rather than just fluctuating as a result of regular trading.

2. Pair it with other analyses: As you can see in the charts above, using other technical analyses tools allows you to leverage the indicator further. You can see resistance and support levels, and get an idea of the price a stock needs to move above or below in order to break higher or lower — or trade within to remain in a trend.

3. Zoom out and see a bigger picture: In a week, a stock might have several swing highs and swing lows. But paired with resistance and support lines, plus other more advanced technical analysis tools like Fibonacci levels, you can use the indicator to get an idea of a stocks longer term patterns and trends.

There are many types of trading strategies that may benefit by employing the zig zag indicator — especially swing and momentum trading.

Why You Should Use Caution Before Deciding To Invest In A Company Based On Zig Zag Indicator Analysis

Like any trading strategy or stock analysis tool, the zig zag indicator is not going to give you any guarantees regarding the likely success of an investment.

It’s a trend following indicator. That means it works on historical data. And while it’s a very useful tool in analyzing past price action, it’s never going to predict what a stock might do next.

In this respect, it’s more of a confirmation tool — albeit a very illustrative and educational one.

If you’re using the indicator in your own investing, be sure to pair it with other forms of analysis and research. And, of course, always be aware that no matter what a trend following indicator — or historical price action — might suggest, you do always risk losing money when you invest it.

Additional Resources Available Online About The Zig Zag Indicator

There’s plenty of good resources about the indicator online to help you learn more.

Here’s a detailed breakdown that explains the basics, strategies for deploying it and several examples of the indicator in use.

This page explains the parameters of the zig zag indicator, and some of the things using it can tell you about a stock’s price action and trends.

Since the indicator is a part of technical analysis, you might want to read this introduction to technical analysis itself.

Level 2 Market Data: How Traders See Market Moves Before They Happen

Imagine knowing how many traders were placing orders in a stock before those orders were fulfilled.

That’s the power of level 2 market data, which, if you’re using the zigzag indicator, or looking for a swing high and swing low in a chart, may come in handy.

We explain how to read and apply level 2 market data here.

Pro Tip: Automate Your Portfolio Performance Tracking

Whatever investment or trading strategy you use, you should always correctly track and analyze your investments’ performance.

The Navexa portfolio tracker tracks stocks, ETFs, cryptocurrencies and unlisted investments together in one account.

Navexa lets you track everything together so that you can track, analyze and optimize your investment performance over time.

With a Navexa account, you’ll receive weekly and monthly email updates on how your portfolio is performing, plus powerful tax reporting tools that make recording and reporting your investment taxes quick and easy.

Plus, Navexa allows you to apply different tax strategies to your investments, meaning you can better control the amount of tax you’ll owe when you sell holdings.

You can access charts of your individual holdings and your portfolio as a whole. If you’re using the zig zag, you could apply it to your entire portfolio to identify historical trends and swings.

Plus, you can drill down on your portfolio diversification, contributions and more — giving you a greater depth of insight into how your investments are performing together and relative to each other.

Create Your Portfolio Performance Tracking Account Free Today

Whether you’re using the indicator as part of a trend following, swing trading or day trading strategy, having access to quality charting and data on your investment and portfolio performance is crucial.

You can try Navexa for free for up to 14 days when you create an account today.

Sign up, add your portfolio securely, and see your true portfolio performance using all our members-only reporting and analysis tools.

Open your Navexa account free today.

Tags stocks, trading

Financial Literacy Investing

Why You Must Understand Asset Allocation Models For Your Portfolio

Post author By Navarre Trousselot
Post date May 27, 2021

Asset allocation is perhaps the most important concept at play in the world of portfolio management today. Learn what asset allocation is, how it applies to your portfolio, and what the best asset allocation models in the world are today.

Asset allocation is at the centre of Modern Portfolio Theory, which is the concept that any portfolio of investments can be optimized to most efficiently balance the level of risk those investments carry.

The concept underpins everything from private investment portfolios to multi-billion dollar hedge funds in the stock market.

Since Nobel Prize-winning economist, Harry Markowitz, introduced his theory of asset allocation in 1952, the idea has become synonymous with diversification.

This post explains the ideas behind asset allocation and the common wisdom on diversification.

We’ll introduce you to the biggest asset allocation models you’re likely to encounter, the different types of assets available in the markets, and the benefits of having a well-diversified portfolio.

Plus, we’ll explain how our portfolio tracker’s reporting tools can help you analyze your diversification.

One important thing to know about asset allocation is that the ideal blend of assets depends significantly upon your age.

Generally speaking (and nothing in this post constitutes personal financial or investment advice), younger investors with a higher risk tolerance, moving towards a less risky asset allocation more in favour of fixed income as they become older.

While asset allocation is all about balancing and mitigating risks to your capital, you should always do your own research and seek professional advice before risking your capital.

What Is Asset Allocation?

Asset allocation, in its simplest form, is the composition of an investment portfolio. Specifically, it’s the relative percentages of stocks, bonds (or other fixed income investments), cash, and other assets you choose to invest in over the long term.

Most professional investors and financial advisors agree that choosing your asset classes is probably the most important decision you’ll make on your wealth building journey.

Now, that doesn’t mean choosing which stocks to invest in. Rather, asset allocation refers to the asset groups.

Modern Portfolio Theory holds that an efficiently diversified portfolio comprises a particular balance of stocks, fixed income instruments and cash.

For example, say you have a third of your portfolio in stocks, a third in bonds and a third in cash.

Low interest rates might drive stocks higher, while cash probably won’t perform so well.

But were interest rates to rise, causing the stock market to panic and stock prices to fall, the cash would start generating a better return.

Applying the strategy of your choice determines the relative extent to which you expose your capital to stocks, fixed income and cash.

Of course, within these groups, there are still many decisions to be made.

A $300,000 portfolio with equal thirds in stocks, bonds and cash could take many forms. For example, the stocks could be blue-chip, large cap companies with a strong track record of paying dividends.

Or, they could be speculative smaller or mid-cap stocks that have a chance of delivering a substantial capital gain.

Stocks have a large spectrum of risk and reward which you’ll need to consider relative to your objectives and the overall allocation.

Why Do I Need To Diversify?

The reason for diversifying can be explained using the eggs & baskets analogy.

If, for example, your portfolio consists of 100% banking stocks, all your eggs are in one basket.

If there’s a financial crisis or crash, the banking sector could get hit hard, meaning your entire portfolio gets hit hard. The basket falls and breaks all the eggs in it.

But if you own a mix of stocks, for example, some technology and pharmaceutical companies alongside your financial ones (and a variety of large cap, mid-cap and small cap companies), then you’re spreading your eggs out and exposing different percentages to different markets.

Diversification is all about spreading risk between investments so that you’re not over exposed. Your risk tolerance is a function of many things, including your time horizon.

Asset allocation and diversification aim for the same objective, but they operate on different levels. Whereas diversification often refers to the mix of stocks you own, asset allocation encompasses stocks and other investment classes (like bonds and cash).

It can also extend to property, cryptocurrencies, and pretty much any other asset which you’d count as part of your overall financial position.

There are two particular types of risk to every investment; systematic and unsystematic.

Systematic risk is a broad, market-wide economic risk (think the 2008 global financial crisis).

You generally can’t protect yourself against big events like this — no matter your risk tolerance.

Unsystematic risk is specific to a country, market or individual company — this is what diversification aims to mitigate.

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How Can I Diversify?

So you know you need to spread your eggs out into different baskets, and consider your time horizon and risk appetite.

That’s the most basic principle of diversification (the two terms are commonly used interchangeably.

The second principle to understand is negative correlation. This is the idea that a properly diversified portfolio (or sensible asset allocation) will include investments that not only don’t react the same way to economic and market events… but that react the opposite way.

The example we gave earlier about interest rates impacting equities and cash savings in different ways is an example of low or negative correlation.

In other words, a well-diversified portfolio will be more resilient and stable than a poorly-diversified one. This is the theory.

Check out this example:

You can see the portfolio comprises four assets: Stocks, bonds, real estate, cash.

So the allocation is 60% stocks, 27% bonds, 10% real estate and 3% cash.

Within the stock allocation especially, you can see diversification at play.

There’s large cap and small cap domestic stocks, which expose the portfolio to the lower and higher risk/reward ends of the local market, respectively.

There are international stocks, which expose it to companies and markets overseas. And there’s a small percentage of emerging market stocks, which expose it to the potentially large gains and losses in overseas economies which are developing and growing quickly (but tend to be volatile).

The bonds, too, are split between government and corporate issuers, providing a spread of risk among the fixed income allocation.

In this example, the investor may have individually chosen each investment. Or, for the stocks especially, they could have invested in ETFs that track the respective sectors.

Which Assets Should Be Included?

You can see in the graphic above that the example portfolio includes investments across four asset classes.

Generally speaking, today we tend to consider four main asset classes.

The Four Main Asset Classes

· Asset Class 1 — Cash: Money in the bank is generally a stable, secure form in which to keep some of your capital. It’s how most of us store our wealth by default.

The problem with cash is that interest rates tend not to beat the inflation rate — meaning your cash’s value will diminish over time.

· Asset Class 2 — Bonds: A bond is a debt instrument. It provides a fixed income. You buy a bond from a government or business and they guarantee to pay you a fixed interest rate while you hold it. Interest rates on bonds tend to be better than what your cash will earn in the bank.

· Asset Class 3 — Stocks/Equities: Stocks essentially let you participate in a company’s activities. You own shares in a business. Those shares can rise, fall and pay income in the form of dividends.

Blue-chip companies pay good dividends and have a record of climbing steadily over the long term.

After mid-cap stocks, you have growth stocks, or small-cap companies, are smaller businesses on an upward trajectory. They are riskier but can deliver bigger, faster returns. Risker and more dynamic again are small-cap and penny stocks.

· Asset Class 4 — Mutual Funds & ETFs: Mutual funds are investment funds where many investors pool their capital and allow a professional fund manager to control it. These funds do charge management fees, though, and require you to allow a third party to select the assets the fund invests in.

An ETF — or exchange traded fund — tracks an underlying index, like the ASX200, for example. Owning shares in an ETF exposes your capital to a specific mix of assets. Like stocks, ETFs vary greatly in risk depending on the sector or market they track.

What Are The Benefits Of Diversification?

The main objective of diversification is to mitigate risk.

Because low or negative correlated assets (like stocks and bonds or other fixed income investments) should, in theory, balance each other out over time, a well-diversified portfolio should steer your capital towards multi-year and multi-decade profits.

Think of it like a correctly-balanced diet.

By eating the right foods from the right food groups, in the right amounts, you’re giving your body the fuel it needs to grow and recover.

If you don’t do this, and your diet is lacking in key nutrients, or excessive with the wrong foods, your body will decline — especially over the long term.

Consider your time horizon in these terms too. An unhealthy lifestyle may carry more risk later in life than when you’re younger.

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Common Asset Allocation Strategies

Strategic: This strategy relies on a ‘proportional combination’ of assets based on how much you expect each to return. You can set initial targets and rebalance from time to time.

Dynamic: This is a more active approach, in which you frequently adjust the mix of assets based on market shifts and price movement. The key to dynamic asset allocation is selling assets that decline and buying more of those that perform well.

Insured: A strategy for the more risk-averse. You start by selecting a value you won’t let your portfolio drop beneath. As long as the investments keep the portfolio above that base value, you actively adjust your allocation. And if it does drop below, you move your capital into safe fixed income assets or cash. You might find mutual funds suitable for this strategy.

Tactical: Tactical allocation is similar to strategic allocation except it allows for ‘tactical’ trades aimed at capitalizing on short-term opportunities within your broader, longer-term wealth building plan. For example, you might invest a small amount in the cryptocurrency markets to expose yourself to some of the big (but volatile) potential gains. Once you’ve made a gain, though, you quickly capture the profits and return them to your main allocations.

Looking for more strategies? Check out these stock trading strategies.

H2: Should You Use An Active Or Passive Management Strategy For Your Investments?

How hands-on, or hands-off, should you be with your asset allocation and portfolio management?

Like so many things in the world of wealth building, how active or passive you are with your portfolio comes down to you, your objectives, your risk tolerance, time horizon, and your other commitments.

The markets change every day. So no single strategy or approach is going to be the best one all the time.

A passive management strategy might take the form of a ‘set and forget’ portfolio. This would involve setting your asset allocation and diversification, spreading your starting capital between the stocks, bonds, cash and other assets, and leaving the portfolio with minimal management or adjustment.

One type of investment that might suit the more passive portfolio and risk-averse is an ETF, since these funds, like mutual funds are often weighted and diversified in terms of the investments they track.

This hands-off approach — if the portfolio is correctly allocated and diversified — should perform solidly over the long term, even if there are times when it doesn’t perform so well due to not being altered to suit changing market conditions.

An active management strategy is more like those listed above — the tactical approach especially. Active is hands on. You’re looking at your portfolio performance often, identifying opportunities to rebalance and re-diversify your portfolio.

Active portfolio management may mean you can expose your capital to better short-term growth opportunities, or protect it from short-term risks.

This style of portfolio management requires a lot more time and research than passive investing. It may also mean your portfolio performance suffers a greater impact from trading fees, since you might buy and sell more often.

The Best Way To Monitor Your Portfolio Performance

Everybody’s allocation models and portfolio diversification strategies are unique to them. Your own objectives and risk tolerance will determine how you distribute your capital across your investments — and how active or passive you are in managing the portfolio.

Whether you’re a set and forget investor, or an active trader monitoring the markets every day, there’s one thing you must make sure you do.

Correctly and thoroughly track your portfolio performance using a dedicated portfolio tracker.

This is because true portfolio performance factors in more than just your nominal gains.

It accounts for how long you’ve held a position, trading fees, currency gain, taxation and dividend income.

The Navexa portfolio tracker does all this (plus, you can generate a variety of reports, from calculating unrealized capital gains to taxable income, portfolio contributions, and many more).

Key Navexa Tools

Portfolio Contributions Report: Instantly see which holdings in a portfolio are contributing the most to your overall performance — and which are dragging on your returns.

Portfolio Diversification Report: See the exact percentages of your portfolio diversification and asset allocation (each sector and each holding within that sector).

Dividend Contributions Report: Income is a huge part of your portfolio performance. Especially over the long term. Use our dividend contributions report to identify which of your holdings are generating the most and least income.

Use these reports today when you try the Navexa portfolio tracker for free!

Tags investing, portfoliomanagement, stock market

Financial Technology Investing

Blockfolio vs. Delta vs. Coinbase: 3 Things You Should Know Before Signing Up

Post author By Navarre Trousselot
Post date May 19, 2021

Buying, trading and tracking cryptocurrencies? Chances are you’ll come across Blockfolio, Delta and Coinbase. Here, we explain how to use each — comparing Blockfolio vs Delta, Blockfolio vs Coinbase, & Coinbase vs Delta.

If you’re taking the plunge into the world of cryptocurrency investing or trading, you’ll need three things.

A place to buy crypto.
A place to store crypto.
A place to track your crypto portfolio.

As Bitcoin and the ever-expanding universe of so-called ‘alt coins’ gains more exposure and popularity, so too does the number of technologies, platforms and applications that support the crypto ecosystem.

And if you are new to the crypto world, you may find yourself overwhelmed at the amount of apps and services vying for your time and attention.

Chances are that you will quickly come across three of the biggest platforms in the crypto world: Blockfolio, Delta and Coinbase.

While Blockfolio and Delta are similar services (with some key differences you should know), Coinbase is a very different platform.

In this post, we’ll introduce you to each, outline its capabilities and the key pros and cons.

Then, we’ll compare the services directly; Blockfolio vs Delta, Blockfolio vs Coinbase and Coinbase vs Delta.

This should give you a great general overview of these three services.

If you’re considering signing up to some or all of them, we encourage you to read this post (and do further research) first!

Blockfolio vs Delta vs Coinbase: Understanding Trackers, Wallets & Exchanges

It’s important to understand that comparing these three platforms requires that you know their particular roles in the crypto world.

Blockfolio started out as a crypto portfolio tracker and has recently added the capability for its users to buy crypto assets within its app.

Delta is a portfolio tracker for cryptos and stocks. While you can’t buy Bitcoin in its app, there are other things you can do which make it potentially very useful.

Coinbase is different again.

As the largest cryptocurrency exchange in the United States (Binance is the world’s biggest at the time of writing), Coinbase’s main service is an app you can use to buy, store and trade Bitcoin and other crypto assets.

Confused? Don’t be.

Just understand this; in the crypto world, there are three distinct tools you need to use.

The crypto exchange: This is where you exchange fiat currency (dollars) for crypto assets like Bitcoin and Ethereum.
The crypto wallet: This is where you store and secure your crypto assets.
The crypto portfolio tracker: This is where you monitor the performance of your crypto investments and track your portfolio’s progress.

Coinbase is primarily an exchange. But it also offers a wallet for secure storage — which you can even connect to a debit card!

Blockfolio — while originally just a crypto portfolio tracker — has now branched out to offer exchange functionality.

And Delta, another portfolio tracker, doesn’t allow you to buy crypto.

But, it does allow you to connect your crypto wallet so you can automatically update your portfolio tracker account.

So not only are there many different types of platforms you’ll engage with on your crypto journey.

There’s also an increasing amount of integration as companies like these move to offer exchange, wallet and tracking services within a single platform.

Let’s get into Blockfolio in a bit more detail.

Blockfolio: The Original Cryptocurrency Portfolio Tracker

Blockfolio has been around since 2014. It started at a standalone crypto portfolio tracker.

The idea was simple: No matter where you bought or stored your crypto, you could add your trade data to your Blockfolio app and monitor your performance in one place.

And that simple idea has taken Blockfolio a long way.

Today, about 6 million people are using Blockfolio to buy, trade and track their cryptos.

Here’s what it looks like:

One of the features Blockfolio offers is Signal, which runs in parallel with the News tab.

While news delivers articles and updates from across the crypto space, Signal is a channel where crypto developers and companies communicate directly with Blockfolio users.

In our experience, Blockfolio is pretty robust (it has been known to crash occasionally and fail to display some data, particularly for smaller cryptos) and fine looking crypto portfolio tracker.

Since they were acquired by crypto exchange FTX, they’ve started offering exchange services within the app.

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Delta: A Premium, Exchange-Connected Tracking App

Delta arrived on the scene a few years after Blockfolio, in 2017.

Like Blockfolio, Delta is primarily a crypto portfolio tracker.

You can view price action for about 7,000 different crypto assets, follow the coins you’re interested in, and synchronise your account across multiple devices.

The biggest benefit of using Delta to track your crypto portfolio is the probably the fact that you can link your crypto wallet.

That means you can integrate your crypto trades seamlesslesy.

Delta supports data from about 300 crypto exchanges.

Which means whether you trade with Binance, eToro, Bittrex or any of the other myriad platforms out there, there’s a good chance you’ll be able to sync your trades.

While it’s simple enough on Delta to manually enter a trade, it becomes far easier to use once you’ve integrated an exchange and automated your buy and sell updates.

You can see the Delta interface doesn’t differ much from Blockfolio’s:

You can also set up your Delta app to send you push notifications based on what you’re tracking and how you use your account.

For a portfolio tracker, Delta packs in plenty of functionality when it comes to seeing price action, all-time and 24-hour gains.

But, like Blockfolio, it lacks a couple of major features. We’ll get to that soon.

First, let’s look at Coinbase.

Coinbase: The Largest U.S. Cryptocurrency Exchange

Unlike Blockfolio and Delta, Coinbase didn’t start life as a portfolio tracker.

Coinbase began as a Bitcoin brokerage service in 2012.

It was a place for investors to convert fiat currency into BTC.

Today, Coinbase is the biggest U.S. crypto exchange and one of the most widely used on the planet.

It’s an exchange, a wallet, an index, a venture capital fund developing and acquiring other crypto projects, and a provider of custodian services for institutional investors moving large sums into the crypto space.

Not only that, but Coinbase has grown so powerful that it even created its own token, USD Coin.

USD Coin is a cryptocurrency that tracks the price of the US Dollar — the fiat currency which those in the crypto world (for all their talk of ‘exiting the system’) tend to use to measure the relative value of Bitcoin and the other cryptos on the market.

If you want, you can do all your crypto investing, trading and tracking with Coinbase, from buying Bitcoin to trading it for other cryptos (even holding in USDC if you want) and tracking the value of your investments.

But since Coinbase is an exchange first and foremost, it offers a very different experience from Blockfolio and Delta.

Blockfolio vs Delta: Portfolio Trackers With A Key Difference

As you can see, Blockfolio and Delta look very similar.

And as portfolio trackers, they pretty much are.

But if we’re comparing Blockfolio vs Delta, these are the most striking differences.

Blockfolio (as of recently) allows you to trade directly within the app. Delta does not (yet).
Delta allows you to link your exchange account, automating the flow of data on new trades. At the time of writing, you still need to manually add your trades to Blockfolio (although you can link some wallets).
Delta allows you to track stocks as well as crypto. Blockfolio is a crypto-only app.
Blockfolio’s Signal feature allows you to hear directly from the developers and technologists behind the cryptos you’re tracking. Delta doesn’t offer this.
Delta lets you export a .csv file of all your crypto trades — handy if you want to back it up before resetting a phone, for example, or adding your trades to another platform (like Navexa).
Blockfolio is totally free (they generate revenue through advertising and, now, trading services via their new owner, FTX), whereas Delta has a free and ‘PRO’ version.

Those are the main differences between Blockfolio and Delta.

For more about each platform, check out this Blockfolio review and this Delta review.

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Blockfolio vs Coinbase: Both Trying To Become Crypto One-Stop Shops

So, now that you have an idea about how Blockfolio works, let’s compare it with Coinbase.

Blockfolio vs Coinbase isn’t a like-for-like comparison.

As mentioned above, Blockfolio started life as a portfolio tracker, and Coinbase as a Bitcoin brokerage.

Today, they’re getting closer to meeting in the middle.

Since FTX acquired it, Blockfolio now complements its coin and portfolio tracking functionality with trading services.

In other words, you can buy Bitcoin directly through the app.

For Coinbase, buying Bitcoin was the first service the platform ever provided.

Today, it offers a huge range of tools when you sign up.

One of the ways Coinbase has expanded is that it, too, offers a portfolio tracking service as well as its exchange and wallet service.

Take a look:

Like Blockfolio and Delta, Coinbase lets you track coins and trades in a simple, clean interface.

But in our opinion, the Coinbase portfolio tracker doesn’t offer as much information as Blockfolio.

Comparing Blockfolio vs Coinbase, these are the main differences.

Coinbase doesn’t provide the same direct feed of developer news as you’ll get with Blockfolio’s Signal feature.
If you’re already trading and storing crypto on Coinbase, you might find it more straightforward to track your cryptos there, instead of manually adding them into Blockfolio.
Since Blockfolio is a tracker first and trading platform second, you might find its tracking interface and features more useful than Coinbase’s.

Coinbase vs Delta: To Trade Or Not To Trade

Since we’ve already covered the key differences between Blockfolio vs Coinbase and Blockfolio vs Delta, you can probably see how Coinbase stacks up against Delta.

These are the big differences.

As an exchange and wallet, Coinbase lets you buy, trade and store crypto. While Delta lets you connect an exchange account (like Coinbase), you can’t trade and store cryptos on its — just track them.
While both apps are established, robust players in the crypto technology market, they have very different interfaces — Delta’s being more optimized for a trading-style view.

No Matter Where You Invest, Here’s Why You Must Track Your Portfolio

Comparing Blockfolio vs Delta vs Coinbase highlights a few things you should understand before you sign up to any, or all of these services.

First, trading, storing and tracking cryptos has tended to happen across multiple different services. These services often integrate with one another to some extent, and they increasingly offer users a full service platform (see Coinbase) from buying crypto all the way through to tracking its performance in your portfolio.

One thing we’ve noticed comparing these crypto platforms is that, while they all offer portfolio tracking, that functionality is in reality quite limited.

Here at Navexa, we take portfolio tracking — for stocks and cryptos — seriously.

We help you dive deeper into your portfolio performance beyond just daily or annual gains.

Navexa tracks the annualized, true performance of your portfolio and its constituent holdings with a high degree of clarity, depth and detail.

By ‘true’ performance, we mean your net gains (in dollar and percent terms) after the platform accounts for the time in the market, trading fees, currency gains or losses, taxation, and dividend income.

If you’re not familiar with the idea of true portfolio performance, check out this guide on the three mistakes you might be making when calculating your own.

In other words, a complete picture of your actual portfolio performance, as opposed to a partial one.

Plus, you can generate a variety of reports, from calculating unrealized capital gains to taxable income, portfolio contributions, and many more.

If you’re serious about understanding your portfolio performance, we recommend a more powerful, dedicated portfolio tracker.

Create a free account with Navexa.

Tags cryptocurrency, portfolio tracker, trading