How to Easily Evaluate your Asset Allocation with Morningstar Instant X-Ray Tool

How to Easily Evaluate your Asset Allocation with Morningstar Instant X-Ray Tool

Despite my licenses, I am not an not an investment expert, and I don’t begin to pretend to be one.  That being said everyone should know their asset allocation, and have an elementary understanding of asset allocation.  I repeat, everyone should have an idea as to what they are invested in, whether they have an advisor who is doing it for them or they are doing it themselves.

I truly believe that this crash has been terrible, at least in part, because people either didn’t give a damn as to how they were allocated – or didn’t know.  I know it isn’t an original statement, but a 55 year old shouldn’t have been 100% equities.

In my previous two posts (Setting up a Roth IRA – 4 Easy Steps Part 1 and Part 2) I talked openly about setting up my younger brother’s Roth IRA.  Part 1 discusses why a Roth works, while Part 2 gives us the meat of what I actually set up.

In response to my 2 part Series, a great blogger, PT Money, commented:

As for your allocation, at first I thought, why bother with a target date fund if you’re going to pick other funds? But then I saw your other funds were on opposite ends of the spectrum. So they likely balance each other out.

Granted, I have some sick tools at work (for those in the business – E-Money, Morningstar Enterprise Edition, etc.) to get a quick snapshot I use Morningstar’s Instant X-Ray Tool.

What is Morningstar Instant X-Ray?

Morningstar describes their tool perfectly (insert sarcasm here),

Instant X-Ray analyzes your holdings the way only Morningstar can

Basically, you put in your mutual funds, stock symbols, etc., and it breaks down your:

  • Asset Allocation
  • Stock Style Diversification
  • Stock Type
  • Stock Sector
  • Stock Stats
  • Even Where in the World you are Investing

It is a ridiculously bad ass tool which is free and requires NO registration.

Using Morningstar Instant X-Ray on My Brother’s Roth IRA

When my brother wanted to set up his Roth IRA, I first had to get acquire his risk tolerance – which to my surprise was moderately aggressive.  Taking that into account along with his age, 26, and how much he was able to put away ($200/mo), I decided we need an equity based portfolio.

To jog your memory, I set up the following Portfolio

MF Name Symbol %
Blue Chip Growth TRBCX 25
Retirement 2055 Fund TRRNX 50
US Bond Index PBDIX 25

As PT pointed out earlier, I wanted the Retirement Fund so to diversify into a bunch of different sectors.

Well My results:

  • Cash – 4.05
  • U.S. Stocks – 55.50
  • Foreign Stocks – 12.62
  • Bonds – 27.44
  • Other – 0.39
  • Not Classified – 0.00

What did Morningstar Instant X-Ray Tool Show me?

My brother may be too heavily invested in bonds.  That being said, I want this Roth to start to grow and then I will rebalance.

Have you used Morningstar Instant X-Ray Tool? Are there better ones out there?

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