SpotLight Investing & Portfolio Optimization


Disclaimer: Spotlight Investing provided trial access to their service only, no monetary compensation was offered for this post.

Lots of people have portfolios they’re comfortable with, that they believe in the strategies, and are sticking with these approaches for the long-term. But many may also have that nagging feeling of, “there could be more” or “there’s a better way to do this”.

As a way of grounding their investments, these people will often look towards technical analysis as a way of complementing their investing styles. On the spectrum, there’s a wide array of techniques: Elliot Wave Theory, Fibonacci Arcs/Fans/Retracements, & Relative Strength Index to name a few. Of course, even the most technical calculations are fallible as we learned with the prediction paradox.

Now – on to the product!

Spotlight Investing uses Modern Portfolio Theory, which seeks to maximize return while minimizing risk. What’s great about this practice is it utilizes those corny engineering buzz-words I love: Optimization & Efficiency! :)

First, you’ll fill out what seems like a standard survey. These initial steps create your hypothetical portfolios. You can go through this process many times and create different allocations. Eventually, the results show the likelihood of your returns given your various answers.

The next section, Analyze, offers a lot of useful information. There are 3 sub-sections, historical performance, projected performance, and one I really like – stress test.

While this information may seem too technical, what’s nice is while you’re going through the process, there are descriptions available explaining what’s going on and what they’re looking for.

Okay. So now that we have the input/output from our answers, we need to understand what we’re being shown right? In the third section, Understand, Spotlight aims to show us how our: time horizon, spending, and saving will affect our results. There are sliders you can play with that will automatically update the different cases presented.

Finally, you’ll arrive at the last section – Choosing Products. It’s worth noting that Spotlight Investing “does not make any money, either directly or indirectly, in any way, from any of the products, funds or securities in our database or shown through the service”. Combining these results with another power tool, the FREE Morningstar Instant X-Ray Tool, should help give you a very clear picture of your investments.

Alright, so now that you’ve read the review you’re interested. There are 2 products available.

If you are interested in subscribing to the program, we never worked out the details, but I bet you could secure a discount if you mention Engineer Your Finances to Mark.

I think these types of products will redefine the financial planning industry. Instead of paying a commission-based advisor or going to a salesman/investment counselor, you can get similar, if not better, information for a fraction of the cost. You also get much more with an email newsletter and the blog articles. This being the trend of providing more service, beyond the core capability, to the client for no extra charge.

Even if you see a fee-only advisor, those can cost $200+ per hour (although I still recommend them in specific instances). Assuming 8,760 hours per year, the 60W only costs $0.017/hour while the 100W costs $0.028/hour for a yearly subscription. Of course, you won’t be managing your portfolio every single hour of every single day…

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16 Responses
  1. Bytta@151DaysOff

    No monetary compensation? Dude, you’re way too generous :)

    As someone who’s planning to semi-retire in 5 years, asset allocation is one area I’ve been concentrating in the past few weeks. I gotta tell you the manual work has been fun. I can’t wait to try this machine and plug in my asset allocation theory.

    This is another website you might be interested in: It’s about managing asset allocation on various index funds (not just your vanilla S&P 500, no offense :)) based on your risk aversion, budget and time horizon.

    I think the principle is almost similar although you can play with your personal asset allocation in various market circumstances here while IFA offers you theoretical fixed allocation.

    Will definitely mention your name 3 times if I decide to buy it by the end of trial period ;)

    1. Fin Engr

      @ Bytta:

      Hmm… I would assume “semi-retirement” puts a lot of pressure on your asset allocation? I’d seen before, and thanks for sharing it with the other readers. Many of these programs/calculations run off the same basis/principle and are tweaked by the creator to match their investment style (?).

      Hahaha – well if you mention it 3x, then you should get 3x the discount yeah?

  2. @FinEngr Thanks so much for the Morningstar x-ray mention. I’ve never heard of that before but tried it; it was helpful and could have saved me a lot of work back in May. Anyway, thanks for the write-up. If I do decide to use it, I will definitely give you a mention!
    Regards, Shawn

    1. Fin Engr

      @ DIY Investor:

      Thanks for stopping by! Given your name, I’d imagine you’re on the lookout for “Do It Yourself” type investing programs. Can you share with us some of your favorites?

  3. The price seems reasonable enough. I’m thinking that it’s still a good idea to follow up with researching individual stock picks. The best advice I ever heard, from Warren Buffett I believe, is invest in what you ultimately believe in. For instance, I really love Netflix (been a subscriber from the beginning) and own shares in their company. If I didn’t think it was a great service, I wouldn’t invest in them. Thanks for the new info and product review. Could come in handy.

    1. Fin Engr

      @ Little House:

      Oh yes, no singular program/software/blogger/pundit should ever be regarded as the “authority”. It’s always a great idea to cross reference all resources to help reduce error. I love Warren Buffett, but want to counter that comment.

      Although he says that, he also does a substantial amount of homework on his companies. Not only that, but the market can incorrectly project the outlook of a company/industry. Easy example of this was the Solar run-up in 2006. Some stocks soared 200% or more on the dream more than the reality of the technology.

    2. Hey Little House,

      I think it was Peter Lynch, another great investor, who advised us to invest in what we know and are familiar with. In your case, it would be Netflix. (=

  4. Hi all

    Mark from Spotlight here. We’ve decided to make the Spotlight service free!

    Essentially, while people are interested in the service the cost proved to be a significant barrier to usage.

    And while we believe the value offered was fair and reasonable, and still are completely independent (we receive no incentives or payment to influence any recommendations or funds), we’d prefer people to use the service than expire under a rock!

    (Yes, we refunded in full those users who did sign up and pay.)

    As always, any and all feedback is appreciated!


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