Overview:
The "Track Investment" tab on Morningstar.com.au is designed to help clients effectively manage and monitor their investment portfolios. It provides a suite of powerful tools, including the Sharesight integration, asset allocation models, and portfolio projection capabilities, all aimed at assisting you in achieving your financial goals.
Calculating the Required Rate of Return for Your Financial Goals
To determine the rate of return necessary to achieve your specific financial goals, Morningstar provides a dedicated tool. This helps you understand the growth needed from your investments.
To calculate the required rate of return:
Navigate to Track Investment tab from the menu located on the left and click on Goals.
Scroll Down and click on Create new Goal Scenario.
Enter Starting value, Future Value & Time Horizon to calculate the Required rate of Return
Additionally, you can also enter Inflation and additional investment to Make it more realistic.
Creating an Investment Policy Statement (IPS)
An Investment Policy Statement (IPS) is a crucial document that formalizes your investment strategy, helping you maintain discipline and consistency in your investment approach. Morningstar's platform allows you to create your own IPS.
To create an Investment Policy Statement:
Navigate to Track Investment tab from the menu and click on Investment Policy Statements.
Click on Create new IPS.
You can link an Existing portfolio to the IPS and set a Target Asset Allocation.
You can write down detailed strategy details and rebalancing details.
Discovering Morningstar's Asset Allocation Models
Morningstar provides recommended asset allocation models tailored to different risk profiles. These models offer guidance on how to distribute your investments across various asset classes.
To find Morningstar's recommended asset allocation models:
Click on the "Track investments" tab.
Click on "Asset Allocation Models.
It is important to note that these models provide percentage distributions to different asset classes (e.g., equities, fixed income, cash) but do not suggest specific investments within those classes. They serve as a foundational guide for constructing a diversified portfolio based on your risk appetite.
Calculating the Future Value of a Portfolio
Understanding the potential future value of your portfolio, given a specific rate of return and inflation, is essential for long-term financial planning. Morningstar's Portfolio Projection tool facilitates this calculation.
To calculate the future value of a portfolio:
Go to premium.morningstar.com.au and sign in to your account.
Click on the "Track Investment" tab, then select "Portfolio Projection."
Input all the required details, such as your current portfolio value, expected rate of return, time horizon, and any planned additional contributions or withdrawals, to generate the projected future value of your investments.