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How do I Choose the Best Portfolio Management Tools?

Article Details
  • Written By: Christine Hudson
  • Edited By: Lauren Fritsky
  • Last Modified Date: 13 July 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Making money, saving money, and investing money is a good start towards security in retirement and financial freedom, but the right portfolio management tools are needed to maintain and grow investments. The right management tools for your portfolio can make the difference between thousands of dollars of profits over the lifetime of your active investing life. Some of the best tips for choosing the best portfolio management tools are ease of use, regular updates, and cost effectiveness. Other factors may need to be considered based on individual needs, so these tips are intended to be customized to individuals.

Choose a program which easily allows you to import your investment activity for tax purposes. The first way to make money is to preserve net worth. The biggest destructive force to net worth is taxes, especially if precise records are not kept and you have to go through the financial and mental hassle of an audit. Protect your money by making sure all of your ducks are in a row with the government. There are many programs which allow you to one-click your activity into your electronic tax forms to make sure that all records are kept immaculate.

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Portfolio management tools with fast execution time are also very important. The bottom line for investment brokers is facilitating the trade, and this is their only required task. Many companies will attempt to distract your attention from their poor execution times with other features like research or a colorful workspace. If a management tool messes up an order because it is slow or lags, it can be days before your portfolio is righted, which means you miss out on other opportunities, not to mention your peace of mind. Your orders should be executed promptly and correctly.

Make sure all the features and fees for portfolio management tools are up front so you can judge if the tools are cost-effective for you. You should be able to easily transfer funds between accounts, see how much money you have available in cash and on margin, easily be able to check the interest rates of variable interest rate investments, and check the investment basket of any mutual funds and exchange-traded funds (ETFs) you may hold. Transparency is perhaps the most important factor in finding the best portfolio management tools, as it avoids issues down the road which may be very expensive to fix.

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