Using Google Docs Spreadsheets

Ex2_WatchListGoogle Docs Spreadsheets is a free online app that creates spreadsheets which can be shared with other people. All that is required to use Google Sheets is a web browser on any operating system. If you are familiar with Microsoft Excel or Apple Numbers, you will be comfortable with Google Docs Spreadsheets.

Unlike Microsoft Excel or Apple Numbers, Google Docs Spreadsheets offers a wide array of financial functions such as current prices, fundamental stock data, and mutual fund performance. The financial functions can be embedded in a Google Docs Spreadsheet to provide nearly real time updates. For more information see the Google docs finance help page.

Click on the spreadsheet above for sample Google Docs spreadsheets to monitor your portfolio.

Returns from Stock Portfolios

A Quantitative Look at Returns from Value and Growth Stock Portfolios

As a long term NAIC/BI investor, I have started taking a closer look at returns of growth stocks in comparison with other asset classes, e.g., value stocks, international stocks, REITs, and bonds. There is very little data showing historic return for NAIC/BI portfolios.

The NAIC Growth Fund is one possible source. It has had a total return (based on NAV) since its inception in 1991 of 9.6%. However, a portfolio of three Vanguard index funds consisting on 25% large cap growth, 50% mid cap growth, and 25% small cap growth funds returned 12.0% for the same period. It may not be fair to use the NAIC Growth Fund for comparison since it is a relatively small fund and it incurs fixed expenses to comply with various SEC requirements. It cannot operate as efficiently as an individual investor’s portfolio.

Anecdotally, some NAIC/BI investors have done very well over time. It appears that some of their success results from using the NAIC/BI methodology as one tool in a larger investing toolkit. These investors use the NAIC/BI methodology to evaluate growth stocks, especially growth and quality, but they also apply a value approach when buying or selling. They buy high quality growth stocks that are on sale and sell them when they become overvalued. I would expect the returns of these portfolios to be closer in return and risk to the blended or value portfolio described below. (more…)

Parking Your Safe Money

This is a response to a question by one of my young adult children. She was looking for a place to put some safe money (i.e., funds that she might need in the next 1-3 years) and wanted to obtain a better rate of interest than that offered by her bank.

Vanguard Money market funds are a good place to park money that you may need in the next 1-3 years.  At at low tax bracket, I would not worry about finding a tax-free fund.  Tax free money market funds don’t become advantageous until you reach the 28% tax bracket or higher.  You can ask Vanguard for a check book for your money market account and redeem shares by check. However, the check has to be $250 or more.

Here are three suggestions. The fund are listed with the safest funds first. The spread between the Treasury-based fund and the prime rate fund is very small. It comes out to about a $25 per year difference on $10,000. So you might want to stay with safety (either Treasury or Federal). That way if the world goes nuts, your funds will be secure.

Vanguard Treasury Money Market Fund (VMPXX). It is currently yielding 4.84%.

Description: The Fund invests solely in high-quality, short-term money market securities whose interest and principal payments are backed by the full faith and credit of the U.S. government. At least 80% of the Fund’s assets will always be invested in U.S. Treasury securities; the remainder of the assets may be invested in securities issued by U.S. governmental agencies. The Fund maintains a dollar-weighted average maturity of 90 days or less.

Vanguard Federal Money Market Fund (VMFXX). It is currently yielding 5.06%.

Description
: The Fund invests primarily in high-quality, short-term money market instruments. At least 80% of the Fund’s assets are invested in securities issued by the U.S. government and its agencies and instrumentalities. Although these securities are high-quality, most of the securities held by the Fund are neither guaranteed by the U.S. Treasury nor supported by the full faith and credit of the U.S. government. To be considered high-quality, a security generally must be rated in one of the two highest credit-quality categories for short-term securities by at least two nationally recognized rating services (or by one, if only one rating service has rated the security). The Fund maintains a dollar-weighted average maturity of 90 days or less.

Vanguard Prime Money Market Fund (VMMXX). It is currently yielding 5.09%.

Description: The Fund invests primarily in high-quality, short-term money market instruments, including certificates of deposit, banker’s acceptances, commercial paper, and other money market securities. To be considered high-quality, a security generally must be rated in one of the two highest credit-quality categories for short-term securities by at least two nationally recognized rating services (or by one, if only one rating service has rated the security). If unrated, the security must be determined by Vanguard to be of quality equivalent to securities in the two highest credit-quality categories. The Fund invests more than 25% of its assets in securities issued by companies in the financial services industry. The Fund maintains a dollar-weighted average maturity of 90 days or less.

The expense ratio is 0.29%. Other mutual fund families have similar offerings. For example, see Fidelity’s offerings. Since Vanguard is the only large mutual fund family that is owned by its share holders, I tend to prefer it. Vanguard also offers some of the best index funds and exchange traded funds (ETFs) available.