What is automation worth to you?

A theme at a recent roundtable we participated in was the cost/benefit of switching to the cloud, known as “going Xero” within certain circles. Not a chat about the security of your selfies, mind you, but about what a business gains or loses by overhauling their day-to-day workflow. The benefits of cloud are obvious if you’re reading this blog. It’s the pain of change that remains a barrier, and the psychological block we all have when it comes to sacrificing something that works for an unknown that’s probably better.

We’re guilty of this at Sharesight. For example, tracking sales and expenses within specific countries and then rolling this up to top line numbers is hard. Especially because our product is virtual. We use Xero to do some of this, but the job is really done in Excel. We know this isn’t ideal, but at the same time it’s what we’re used to. We’ve investigated apps that work with Xero to do this on our behalf. They work brilliantly, but we just haven’t quite made the switch.

What is automation worth to you?

We see this with Sharesight clients too, especially those who’ve tracked their portfolios the old-school way for years. There’s a perverse satisfaction to keeping tabs on your capital gains and dividends in an Excel spreadsheet. Punching in data by hand reconfirms a genius stock pick after all! Even after they’ve begun using Sharesight, some clients ask us to build features that are already being done for them. You’d be surprised at how many people ask for tools that would basically allow them to reengineer the Portfolio Overview page or the Performance Report.

A lot of this boils down to the fact that a spreadsheet is a snapshot in time. A statement of your portfolio’s position as at the moment you click “Save,” whereas with Sharesight you’re looking at your living, breathing portfolio each time you log in. Contract notes pile in automatically and the performance calculations are done on your behalf. Sure you can export reports to Excel and file them away, but why not just send your accountant a login? We’ve slayed the admin beast for you, and all of a sudden you have Sunday afternoon back. A client recently told us that working out his portfolio tax used to take him 4 hours. Now it takes him 40 minutes.

 

 

And that’s what “going cloud” is all about: time savings. If Xero, Sharesight, or Receipt Bank can automate 90% of what used to take hours, then take the plunge. Even if using Xero + Sharesight + a collection of other applications increases your operating costs, think about what you can do with those free hours.

Make no mistake, automation that works is something worth paying for. Applications that are free or just a $1 per month probably aren’t going to solve your problems, nor will they be around long-term. And what happens to your data after they disappear? For investors, Sharesight costs $275 per year. That’s $275 for 20 years of historical price and dividend data across global markets, a service that listens for your trades, and runs you performance and tax automatically across 3 portfolios. We think that represents excellent value.

No app will be a silver bullet, but you must force yourself to think about what you’ll do with your refund on time.

Announcing ASX mFund: Now available on Sharesight

We’re excited to announce that mFunds are now available on Sharesight. We’ve worked with the ASX to incorporate mFund data, which means we’re now receiving daily, automatic updates across their entire range of investments – just like any tradable security. And this means that you can begin tracking your mFund holdings in your portfolio since brokers are already offering mFund execution.

ASX mFund

It’s exciting to be at the forefront of what should be a huge win for DIY and professional investors: direct, low cost access to a range of local and overseas fund managers. This translates to one-click diversification and portfolios that are less exposed to local banks, houses, resource companies and as a result, China.

Australia boasts one of the largest and most active investor populations on planet Earth, but until now managed funds haven’t played a direct role in this, which is a shame. In other markets, such as the US, managed (mutual) funds are strongly associated with responsible, self-directed nest-egg-builders. In fact Fidelity, a fund manager, has morphed itself into one of the country’s largest online brokers as a result.

In Australia we have compulsory superannuation, which is a great policy on paper. However, this results in a lazy relationship between households and the fund managers looking after their savings. People are locked-in contributing their 9.5%, while the fund managers are content with guaranteed inflows of cash. There’s been little reason for anyone to question fees, asset allocation, or learn about managed funds – but technology and the rise of self-managed superannuation will disrupt this codified framework.

mFund will be a win for financial advisers too and should help distance those who are truly adding value from those who’ve relied on commissions from product manufacturers. Those looking out for the interests of their clients will have a hard time not using mFund due to their low cost and pricing transparency. Many advisers are already pivoting their businesses to account for this, and are on the hunt for portfolio reporting and administration alternatives to platforms and wraps. Enter Sharesight. If an adviser no longer relies on a platform for fund execution, then there’s no way to justify their high fees for portfolio admin alone.

In a country where retail (and even wholesale) consumers get screwed on price for the same product sold overseas (the ridiculous markup on digital music or trainers just to cite a couple of examples) it’s a welcome development to see an institution as reputable as the ASX step in to look out for the interest of investors. We live in a world where large institutions are trying to unlock value by forming direct relationships with their end clients. Investors should stand to win if an arbiter like the ASX acts as the conduit between them and the world’s leading fund managers.

New Features: Custom groupings, display options, more chart improvements

We recently released improvements to our charting package, and hinted at more improvements to come regarding analytics and display options. Today, we released three additional features: custom groupings, the ability to display your returns in dollars or percentage throughout the application, and even more improvements to charting.

Custom Groups

Many of you asked for options around how to display your portfolio holdings. Previously, our (locked) default was by market participation. Now you have a choice between: Market, Industry Classification (GICs), Investment Type, Country, or a Do Not Group option.

Sharesight Custom Grouping

This setting can be found in the “Advanced Options” menu, which is new. We’ve added a link to this menu on the Portfolio Overview page and on all of the Reports pages. Once you’ve made your selection, click “Apply”, and your grouping of choice will be carried throughout the application – from the home page to the reports. This setting will also change the groupings of the charts. We think these five options are a good start, but expect more in this area later in 2014.

Sharesight Charting Improvements

Performance Display Options

While we’ve always allowed you to display figures in dollars or percentage, this was limited to certain parts of the application and didn’t carry through the entire product. And it required a refreshing or reloading of any page where you made a change. We’ve greatly improved this by adding a “$/%” toggle button in the heading of every data table on Sharesight. Plus, we do the calculations for both settings behind the scenes, which means there’s no delay when you switch back and forth.

Sharesight - Performance Display Options

Further Charting Improvements

We’ve also made two minor improvements to charting on the Portfolio Overview page which will save you time. We’ve moved the chart type drop-down menu to the left side of the page so it’s grouped with the other display option settings. And we’ve eliminated the “Go” button. Now when you make a change to any setting the change will be applied immediately. Less clicks = better experience!

Sharesight - Charting Improvements

Zero dollar brokerage – too good to be true?

We were introduced to Robin Hood a few months ago. This is the outfit in the US offering commission-free trading. Like many tech companies it seems like they’re going for user-adoption first, and will work out how to monetise their customer base later on. I love this idea, but others aren’t so sure.

A recent article in Vox by Matthew Yglesias called the idea “terrible.” Matthew claims that you are incapable of selecting investments on your own. He says:

That’s because the problem with buying and selling shares of stock has very little to do with brokerage fees. The problem is that you are not very good at picking which stocks to buy and sell. You do not have the level of investment skill necessary to beat the accumulated research departments and trading algorithms of all the time investment banks and hedge funds.”
Matthew Yglesias

I guess Matthew believes that the only thing holding back 300 million Americans from trading like they play Candy Crush is $6.95. This piece is half complete. It would be better if Yglesias addressed the opportunity Robin Hood provides those of us non-hedge fund investors who do know what we’re doing. Zero dollar brokerage is the first step to a more engaged investing public.

If we use Matthew’s definition of “you,” he’s right. Lumping every man, woman, child, and golden retriever who plays their hand at the market into one bucket makes for some uninspiring data. You’ve heard the “monkey throwing darts at a board” story. This is why most people are better off using low-cost ETFs or web-based financial advice products. “We,” as an investing public don’t have the knowledge, the time, or the discipline to invest.

Zero Dollar Brokerage

But for those of us who’ve taken the time to research companies and build portfolios thoughtfully, Robin Hood is a welcome development.

One of the main reasons “we” can’t beat the market is due to high, fixed fees. Not only brokerage fees, but the cost of placing our money in the trust of others, which is the alternative to doing it ourselves. In fact, Morningstar, the research house and data provider admitted that fees are a better predictor of future returns than their own research. Removing fees from the equation offers more in returns to investors who know what they’re doing.

The backdrop to Matthew’s piece is that it’s to complicated to invest, too hard, and we’re too stupid to do it. That’s sad. And it’s exactly the type of message that drives people away from taking ownership of their 401ks, pensions, superannuation, etc. Early-stage financial education and a long-term approach combine to make high quality portfolios. And the best portfolios are the simplest.

Is the investing public better off with artificial barriers to trading like commissions, or are we smart enough to figure out that rapidly buying and selling shares while racking up losses and capital gains tax is a truly, terrible idea?

Are we better off learning from our own bad investment ideas or handing over fees to a bank because it’s not even worth educating ourselves?

I like to think that Sharesight clients already know the answer to these.

My advice to the new investor would be to build an investment foundation with a few core ETFs, gaining the diversification that Matthew suggests, but then to join a stock club or subscribe to a well-known research provider. When you truly understand a company and are ready to buy shares, seek out the cheapest way to invest.

Xero Cashbook now available via Sharesight

We’re thrilled to announce that Xero Cashbook is now available as a bundled add-on with your Sharesight subscription.

Take a free (seriously no strings attached) 30 day trial by clicking the Xero button in the Plans & Billing page inside your Sharesight Investor or Expert plan. If you like what you see, you can continue using Cashbook for $15 per month.

This is an industry first. Individuals have never been able to access Xero directly without being invited by a professional intermediary. Until now. We’re the first Add-On Partner with the ability to offer Xero. We’re proud they chose us to partner with on the back of Sharesight being named Add-On Partner of the Year last month.

Xero Cashbook + Sharesight

What is Xero Cashbook?

Cashbook is a cut-down version of Xero Partner Edition (the product sold to accountants), but with the same core features. With Cashbook you can track all of your bank accounts, credit cards, term deposits, even your broker-linked cash accounts and margin loans. It’s probably the best cash-tracking product in the world. You can run reports, share access with your accountant or financial adviser, and connect to the Add-Ons in their app store.

Why do I need it?

Cashbook is the ultimate personal finance tool (in fact, it’s so good, small businesses use it too). Once you’ve added your bank accounts, Xero will track all of your incoming cash and outgoing expenses. This makes bank reconciliation a one-click process. Once you’ve built up some history, Xero will even begin to suggest auto-reconciliations. All of this can be done on their mobile app too (you’ve probably seen their ads at the bus stop).

And Sharesight will send your trades and dividends through to Xero in real-time, including number of units traded, execution price, brokerage fees, and details such as franking credits and tax withheld. This means that your investment portfolios are now part of your overall budget and total wealth picture, automatically.

Once you have Xero and Sharesight connected you can also pull your cash data back into Sharesight. This is a great way to track cash investments inside your Sharesight portfolios.

Now your household P&L, balance sheet, and cash flow can be run on the fly, across any date range. Seeing salary alongside dividends received and interest earned is awesome. So is tracking brokerage fees, and capital gains and losses.

When you share access with your accountant or financial adviser all of the admin work is done. We have a number of clients doing just this for their Self Managed Super Funds too.

Why are we selling it?

Because it’s awesome and we’re never going to build an accounting application. And because we’re building an app store of our own for investors. To date we’ve added brokers, a online financial adviser, and an accounting application. More to be announced soon…

We’ll continue focusing on investing while Xero focuses on accounting. You’ve heard us bang on before about the power of connected applications. You can do so much more across a few tabs in your browser than with one thinly-spread software solution. Xero helped define this concept, which runs counter to vertically integrated, walled-garden financial service providers.

Now you have a free opportunity to see what we’re talking about.