Creating A Simulated Investment Portfolio: A Step-By-Step Guide

A mock or dummy investment portfolio is a risk-free way to learn about investing and build confidence without losing any money. It involves setting up a simulated collection of financial investments, such as stocks, bonds, commodities, cash and exchange-traded funds (ETFs), and buying and selling them over time without committing any real money. Many websites offer online portfolio tracking, allowing users to research companies, make pretend investments, and track their performance over time. This can be a great way for aspiring investors to overcome the fear of taking the first step into investing and gain experience in the investing environment without putting their hard-earned cash on the line.

Choose a platform

There are several platforms available for creating a mock investment portfolio. These platforms offer different features and cater to different levels of users, from beginners to professional investors. Here are some popular options:

Covey

Covey is a free virtual mock portfolio tracker that allows you to track your portfolio's performance, projected future growth, asset allocation, and fees. It offers a wide range of asset classes, including stocks, bonds, and cryptocurrencies. Covey provides a community aspect where you can learn from and share ideas with other community members to develop a winning strategy. You can also earn rewards and become an investment manager on their Copy Trading App if you rise to the top of the leaderboard.

Ziggma

Ziggma is a comprehensive investment management, stock analysis, and portfolio tracking platform. It helps investors understand their portfolios through robust management tools and provides high-quality quantitative stock research at a low cost. Ziggma's portfolio monitoring dashboard enhances holistic portfolio tracking for real and virtual portfolios, summarising vital parameters like risk, portfolio quality, performance, portfolio yield, and ESG scores. It also offers stock and ETF screening, stock profiling, and portfolio diversification tools. Ziggma has a freemium version and a premium version at $7.49 per month.

Delta Investment Tracker

Delta is a multi-asset portfolio tracker that provides a clear overview of your total virtual portfolio balance and the profit or loss for each timeframe. It allows you to track live price movements of various asset classes, including cryptocurrencies, stocks, ETFs, bonds, options, and futures. Delta has a minimalist interface with a default dark mode, making it ideal for beginners. It also offers smart notifications and deep asset details and analytics. Delta Pro users can connect to unlimited exchanges and wallets and sync up to five devices. The average subscription price for Delta Pro is $60.

AssetDash

AssetDash is a privacy-focused platform that allows users to track their investments across multiple assets, including NFTs, cryptocurrencies, stocks, mutual funds, and bank balances. It supports over 100 apps and diverse financial markets, allowing seamless linkage to your financial accounts. AssetDash fosters engagement among users by sharing investment insights and strategies, creating a social component for learning and discovering new ideas. Signup only requires an email and password, but financial account information is needed to link to the platform.

Stock Rover

Stock Rover is a platform that provides in-depth analysis of your portfolio, including overall portfolio performance, holdings performance, dividend-adjusted returns, and the risk and reward of investments. It allows you to review trends in your holdings and bring together all your investments, even if they are scattered across different accounts. Stock Rover offers various filters and metrics to help users identify potential investment opportunities based on valuation measures, growth potential, and risk factors. The platform starts at $7.99 per month.

Kubera

Kubera is a modern financial tracker that helps users track net worth and investment returns for various asset classes, including cryptocurrencies, stocks, ETFs, mutual funds, global currencies, precious metals, private equity, and assets like URL value and vehicles. It stands out for its connectivity to all primary crypto exchanges and wallets and more than 20,000 financial institutions globally. Kubera's interface is similar to Excel and Google Sheets, making manual data entry intuitive. It provides real-time charts and reports, secured sharing capabilities, and a complete financial overview. Kubera costs $15 per month or $150 annually.

Set up an account

Setting up an account for your mock portfolio is straightforward. Many websites offer online portfolio tracking, and some are even free. For example, you can use the free portfolio tool on the Financial Times website.

To get started, create a free account on the website of your choice. On the Financial Times website, you would select 'Portfolio' from the top right-hand corner, which takes you to the Portfolio Dashboard page. From there, you can click on 'New Portfolio', give your portfolio a name, and save it.

Now you've become a virtual portfolio manager! The next step is to add some investments to your portfolio.

Research companies

Researching companies is a key part of investment research, which is the bedrock of informed financial analysis. It involves a detailed examination and analysis of various financial instruments, markets, and economic trends to aid investors in making investment decisions.

• Get familiar with research tools and platforms: Start by exploring different research platforms and tools that can provide you with valuable information about companies. These platforms may offer quotes for individual stocks, company financial statements, key company statistics, news, and other relevant data. Some examples include Fidelity.com and the SEC's EDGAR (Electronic Data Gathering, Analysis, and Retrieval) website.
• Review financial statements and reports: Publicly traded companies are required to release their financial statements and reports to the public. Review documents such as Form 10-K (annual report) and Form 10-Q (quarterly update) to understand a company's financial health. Pay attention to revenue, net income, earnings per share (EPS), price-earnings ratio (P/E), return on equity (ROE), and return on assets (ROA).
• Understand the company's business and competitive advantage: Ask yourself if you truly understand the company's business model and how it makes money. Look for a competitive advantage that sets the company apart from its peers, such as brand recognition, innovative capabilities, patents, or operational excellence.
• Evaluate the management team and board of directors: Assess the quality of the company's management team and board of directors. Consider their track record, experience, and ability to make strategic decisions. Look for a diverse group of individuals who can provide independent thinking and objective assessments of the company's operations.
• Identify potential risks and red flags: Think about potential risks and challenges that could impact the company's long-term growth. Consider "what-if" scenarios, such as changes in leadership, the emergence of new competitors, or shifts in technology.
• Compare with industry peers and historical performance: Put the company's performance into context by comparing it to its industry peers and its own historical data. Look at how the company has performed over time, especially during tough economic periods. This will help you assess its resilience and ability to navigate challenges.
• Look for analyst reports and recommendations: Research reports and recommendations from investment research analysts can provide valuable insights. These analysts specialize in specific sectors or industries and offer guidance on individual companies within their coverage area. Take into account their buy, hold, or sell recommendations, but also form your own opinions.
• Consider macro-economic factors: In addition to company-specific research, stay informed about broader economic trends and factors that can impact the market as a whole. This includes monitoring interest rates, inflation, economic activity, and employment data.

Choose investments

When choosing investments for your mock portfolio, you should consider the following:

• Objective and time horizon: Think about your financial goals and how long you want to invest for. Generally, longer-term investments result in higher returns and allow you to invest in riskier assets, as you have more time to recover from any short-term losses.
• Risk management and sectors: Consider the volatility of the stocks you choose. For example, energy company stocks tend to be more volatile, while food business stocks are often more stable. Diversifying your portfolio across different sectors, indices, and countries can help reduce risk and improve returns.
• Core and satellite approach: Combine conservative, long-term, low-cost investments (the core) with riskier, 'best ideas' investments (the satellites). Core investments might include blue-chip shares, ETFs, dividend shares, bonds, and cash savings. Satellite investments could include small-cap shares, cryptocurrency, and short-term positions.
• Paper trading: If you're just starting and not ready to commit funds, you can use paper trading to give yourself 'fake dollars' and choose the shares you want to invest in. Calculate your returns after a month and see how you performed.
• Fees: Be mindful of fees such as brokerage or trading fees, as these can impact your overall returns.
• Market conditions: Keep in mind that market conditions can vary, and not all simulation platforms may accurately replicate real-world market behaviour.

Remember, a mock portfolio is a great way to learn and make mistakes without risking your money. Take the time to research companies, decide on your investments, and track your performance over time.

Track performance

Tracking the performance of your mock portfolio is a crucial aspect of the investment learning process. Here are some detailed instructions and tips to help you track the performance of your fake investment portfolio:

Set Clear Investment Goals:

Before creating your mock portfolio, define your investment goals and objectives. This practice will guide your investment decisions and strategies. Determine your investment time horizon (short-term or long-term), risk tolerance (how much risk you're willing to take), and desired outcomes (profit, capital preservation, etc.).

Choose a Portfolio Tracking Platform:

Select a suitable platform to create and manage your mock portfolio. There are several options available, including online platforms like Yahoo Finance, Google Finance, and Mock Portfolio websites (MockPortfolio.com, MarketWatch Virtual Stock Exchange, etc.). These platforms allow you to create a virtual portfolio with fake money and track its performance.

Select Investments and Create Your Portfolio:

Choose a variety of investments, such as stocks, bonds, ETFs, mutual funds, or cryptocurrencies. Diversify your mock portfolio by selecting investments from different sectors or industries. Once you've decided on your investments, input them into your chosen portfolio tracking platform.

Monitor and Analyse Performance:

Regularly check the performance of your mock portfolio. Most platforms will provide real-time updates and analytics to help you track the value of your portfolio over time. Compare your portfolio's performance against relevant benchmarks, such as stock indexes or other assets. Assess how your mock investments are impacted by market events, news, and company updates.

Adjust and Refine Your Strategy:

Based on the performance of your mock portfolio, make necessary adjustments to refine your investment strategy. Evaluate which investments are performing well and which ones need to be changed. Consider factors such as earnings reports, market trends, and company news when deciding on adjustments.

Engage in Continuous Learning:

Stay updated with financial news, market trends, and investment strategies. Follow reputable sources and analysts to enhance your investment knowledge. Encourage discussions and seek input from others to broaden your understanding of the factors influencing stock prices and portfolio performance.

By diligently tracking the performance of your fake investment portfolio, you will gain valuable insights into the dynamics of the market and develop a better understanding of investment strategies. This practice will help you make more informed decisions when managing a real investment portfolio.

Frequently asked questions