2020-11-22 02:12

Asset Allocation

Introduce Asset Classes in Investments


Here is a proposal for the introduction of Asset Classes, related to investments. Similar to Budgets, Asset Classes would be a simple user-editable list (table), which could contain records like: cash, international shares, domestic shares, value, small-cap, government bonds, etc. depending on each user's preferences for asset allocation. Each user can customize the list but we could also suggest some basic list initially (i.e. cash, large-cap stocks, small-cap stocks, international stocks, local bonds, international bonds).

Asset Allocation items (in the list above) contain basically just one number - the percentage allocation (i.e. govt. bonds = 10%, international shares = 13%). So, technically, this is a new table with fields - id (num) - name (text) - allocation (num)

The Stock records would have an additional field where they could be linked to one of the asset classes (AssetAllocationId). The link is not mandatory, though. In that case, these stocks would simply be listed as Unassigned in any of the reports/views on asset allocation. This link can also be done via a dictionary table so no changes to the Stock table would be required.

The benefit of this is to have and maintain a quick view of the portfolio in relation to the asset classes. This could be quite beneficial and valuable to anyone holding investments and/or retirement funds. Asset Allocation is one of the most important aspects of investment. (See, for example, this advice from Vanguard). Simple update of the stock prices would be immediately reflected in the Asset Classes view/report and provide instant feedback. This is something people spend hours at a time, just to get to the final allocation numbers.

The Asset Allocation view/report could display: - asset allocation name, - allocated %, - allocated/target value (calculated), - current value (calculated), - difference (calculated)

Allocated value is the value of the allocated % of the total portfolio (value = total portfolio * %, i.e. government bonds value = total portfolio * allocation / 100). Current value is the current value of the related securities in the portfolio for each asset class. (current value = value of linked securities for the asset class). The important thing is the difference, either in % or in value (in base currency), or both.

I'd be very keen to implement this on the phone but we'd need the additional table and the field. Opinions? Thanks!


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