Mastering Investment Projections With Spreadsheets: A Comprehensive Guide

Investment portfolio projections on spreadsheets are a useful tool for any investor. They allow you to keep track of the value of your investments over time, monitor your progress against financial goals, and make informed decisions. While brokerage platforms offer similar functionalities, spreadsheets allow for a more concise view of your investments.

A typical investment portfolio projection spreadsheet will include the following information: entry date, stock ticker, trend, current price, purchase price, cost basis, current MTM, unrealized P&L, and status. Additionally, it may include basic financial information such as market cap, EPS, P/E ratio, 52-week high/low, dividend yield, and earnings date.

There are several free spreadsheet templates available online, such as the Portfolio Tracker, which can be customized to your needs and help you efficiently manage your investment portfolio. These spreadsheets can be used with software like Microsoft Excel or Google Sheets, making them accessible and easy to use.

By utilizing investment portfolio projection spreadsheets, investors can gain a comprehensive understanding of their financial position and make more informed decisions to achieve their investment goals.

Tracking stock portfolio performance

Choose a Spreadsheet Platform:

You can use Microsoft Excel or Google Sheets, depending on your preference. Both platforms offer unique advantages. Excel is more powerful for complex calculations, while Google Sheets allows for automatic updates from public finance sources and accessibility from any device with your Google account.

Create an Investment Excel Template:

Design a template that suits your needs. Include columns for essential information such as transaction dates, security names, the number of shares, unit prices, fees, and commissions. You may also want to include columns for tracking gains or losses and the current market value of your investments.

Record Transactions:

Each time you buy or sell securities, record the transaction details in your spreadsheet. This includes the date, type of transaction (buy or sell), stock ticker, number of shares, fees, and any other relevant information. Maintaining accurate records ensures you have a comprehensive view of your investment activity.

Utilize Formulas and Functions:

Take advantage of the spreadsheet's formulas and functions to automate calculations. For example, you can use formulas to automatically update the number of shares you hold for a particular stock after a transaction or to calculate gains or losses for each transaction.

Analyze Performance:

Beyond just tracking transactions, use your spreadsheet to analyze the performance of your stock portfolio. Calculate metrics such as the total value of your assets, the average cost per unit, and the current market value. Compare the performance of individual stocks or sectors using charts and graphs to identify top-performing investments.

Monitor Benchmarks:

Use benchmarks to assess the performance of your investments relative to the market. Compare your investments' performance against relevant indices or industry standards. This helps provide context and identify areas where your investment strategies may need adjustments.

Evaluate Asset Allocation:

Your spreadsheet can also assist in evaluating the allocation of your assets. Compare your desired asset allocation strategy with your actual allocation to make more informed decisions. This is particularly useful when determining the aggressiveness of your investment strategy.

Stay Organized:

Organize your investment data into categories to make it easier to understand your portfolio's performance. You can categorize investments by type, sector, or industry. This helps in identifying diversification opportunities and managing risk.

Automate Updates:

If you use Google Sheets, you can set up your spreadsheet to automatically pull data from public finance sources, ensuring your information stays up to date without manual intervention. This saves time and reduces the risk of errors.

Track International Investments:

If you have international assets and investments, your spreadsheet can help you keep track of them. Include relevant columns to record and monitor these investments alongside your local holdings.

By following these steps and tailoring your spreadsheet to your specific needs, you can effectively track your stock portfolio's performance, make informed investment decisions, and work towards achieving your financial goals.

Analysing historical data

Historical data analysis provides valuable insights into market behaviour and dynamics, helping investors make more informed decisions. For example, by analysing historical price data, investors can identify support and resistance levels, which help determine optimal entry and exit points for trades. Similarly, historical volume data indicates trading activity and can reveal market liquidity and investor sentiment.

Additionally, historical data can be used to identify long-term market trends, which play a significant role in understanding the overall risk environment and potential future challenges. This analysis can also help in quantifying risk exposure to specific assets or sectors by examining past performance and estimating potential downside risks.

Another benefit of historical data analysis is the ability to identify cyclical patterns. By studying past market cycles, investors can determine periods of higher volatility and identify when certain sectors are more susceptible to downturns. This allows for more effective risk management and strategic decision-making.

When analysing historical data, it is essential to use key metrics such as Return on Investment (ROI), Standard Deviation, Beta, and the Sharpe Ratio. These metrics provide valuable insights into past performance, risk exposure, and potential investment opportunities.

In conclusion, historical data analysis is a powerful tool for investors to assess risk, identify trends, and make more informed investment decisions. By learning from the past, investors can improve their strategies, limit losses, and maximise returns.

Creating a watchlist for future investments

Creating a watchlist is a crucial step in monitoring future investment opportunities. A watchlist is a collection of securities that an investor keeps an eye on, intending to capitalise on favourable price movements or identify potential trading opportunities. It is a proactive approach that enables investors to stay informed about market trends and make timely investment decisions.

Identify Your Investment Criteria:

Before building your watchlist, it is essential to define your investment objectives and the types of investments you are seeking. Consider your risk tolerance, investment horizon, and any specific sectors or asset classes you want to focus on. This will help you tailor your watchlist to align with your investment strategy.

Select a Platform:

Choose an online trading platform that offers watchlist functionality. Popular platforms like Fidelity or Robinhood allow users to create watchlists and track stocks. Additionally, some platforms, such as Worden's TC2000, Wealth Lab, and Trade Ideas, provide extensive databases for a fee.

Populate Your Watchlist:

Start by adding a diverse range of securities from different sectors and capitalisation levels. Include a mix of market leaders and laggards to capture potential opportunities for growth or short-selling. You can also incorporate your favourite stocks, such as widely held issues like Apple, Amazon, and Meta (formerly Facebook). Ensure you have a balanced watchlist that covers various sectors, including REITs, utilities, and high-yielding instruments.

Utilise Stock Screeners:

Take advantage of stock screeners or similar tools to identify stocks that meet your technical and fundamental criteria. You can set specific metrics, such as earnings, long-term performance, or price movements, to automatically populate your watchlist with relevant securities.

Monitor and Adjust Regularly:

Watchlists require active management. Review and update your watchlist regularly, at least a couple of times a month. Remove stocks that no longer meet your criteria due to technical violations, mergers, or other factors. Stay informed about market news and keep an eye on your watchlist securities' performance and any potential trading signals.

Organise Your Information:

Structure your watchlist to display critical information clearly. Devote at least one screen to watchlist tickers, showing essential details such as the last price, net change, and percentage change. Consider adding charts to visually track price patterns during the trading day.

Set Up Alerts:

Configure your watchlist to alert you to any significant trading signals or price changes. This feature, offered by some platforms, helps you stay on top of market movements and react promptly to potential opportunities.

By following these steps, you can create a dynamic watchlist that assists in identifying future investment prospects. Remember to regularly review and adjust your watchlist to align with market changes and your evolving investment goals.

Calculating total investment value

Calculating the total value of an investment portfolio is a complex task that requires a good understanding of the different variables involved. The first step is to decide what data to include in the calculation. This may include the date, entry size, closing prices for specified dates, the difference between the closing and entry price, the percentage return, profit and loss for each periodic closing price, and the standard deviation.

The next step is to enter the relevant data into a spreadsheet program such as Microsoft Excel. This program can be used to automatically calculate certain metrics such as the standard deviation, percentage return, and overall profit and loss of an asset or portfolio. For example, to calculate the difference between an asset's current price and its entry price, you can click on the cell where you want the difference to appear, type an equals sign, click on the cell containing the current price, type a minus sign, and then click on the cell containing the entry price.

To calculate the total value of the investment portfolio, you need to consider the following:

• Return rate: This is often the most important factor for investors, as it indicates the potential profitability of the investment. It is usually expressed as a plain percentage but can be used to compare different types of financial investments.
• Starting amount: Also known as the principal, this is the initial amount of the investment. It could be a large amount saved for a specific purpose, an inheritance, or the purchase price of an asset.
• End amount: This is the desired amount at the end of the investment's life.
• Investment length: The length of an investment can affect its riskiness, as longer investments are generally riskier due to unforeseen future events. However, longer investments also allow for more compounding of returns, leading to greater rewards.
• Additional contributions: Also known as annuity payments, these are not necessary but can increase the accrued return and result in a higher end value.

Once you have entered all the relevant data and formulas into the spreadsheet, you can calculate the total value of the investment portfolio by summing up the values of all the individual investments. This will give you a clear picture of the overall value and performance of your portfolio.

Evaluating asset allocation

The asset allocation you choose will depend on your financial goals, investment time horizon, and risk tolerance. A very conservative investor, for example, will seek portfolio stability and preservation of capital, while an aggressive investor will focus on pursuing portfolio appreciation over time and will be able to tolerate market downturns and volatility.

To evaluate your asset allocation, you should consider the following:

• Financial Goals and Objectives: Understand your long-term financial objectives and assess whether your current asset allocation is aligned with these goals.
• Risk Tolerance: Evaluate your risk tolerance and ensure that your asset allocation matches your comfort level with risk. If you have a low-risk tolerance, you may want to allocate more towards bonds and cash, while a higher-risk tolerance may lead you towards a higher allocation of stocks.
• Investment Time Horizon: Consider your investment time horizon, which is the amount of time you plan to hold your investments before needing the money. If you have a shorter time horizon, you may want to allocate more towards conservative assets like bonds and cash, while a longer time horizon may allow for a higher allocation of stocks.
• Diversification: Assess the diversification of your portfolio across different asset classes, sectors, and individual investments. Diversification helps to reduce risk and improve the overall performance of your portfolio.
• Performance Evaluation: Analyze the performance of your investments over time and compare it against relevant benchmarks. This will help you identify areas that require adjustments to meet your financial goals.
• Rebalancing: Periodically review and rebalance your portfolio to ensure it remains aligned with your financial goals and risk tolerance. This may involve buying or selling assets to return your portfolio to your desired allocation.
• Tax Efficiency: Evaluate the tax efficiency of your portfolio by assessing the impact of taxes on your investment returns. Certain types of investments or strategies may offer tax advantages, and you can structure your portfolio to optimize tax efficiency.

By regularly evaluating your asset allocation and making adjustments as needed, you can improve the likelihood that your portfolio will help you achieve your financial goals while managing risk effectively.

Frequently asked questions