I have tracked the amount invested in my goal portfolio for over 12 years. It has been a life and game changer for my family. Whether you track your spending or not, tracking your investment amount is crucial.
Today, I can invest more for retirement than my target investment. That was not the case when I started. In 2011, I noticed I was consistently investing less than the target. For several months in 2013, 14, and 15, I could not invest due to higher expenses and struggled to make up for it. For details of my portfolio holdings and review see: Portfolio Audit 2023: The annual review of my goal-based investments
By target, I refer to a thorough retirement planning calculation output. If you are wondering, “Why did he stop investing due to higher expenses? Why did he not use an emergency fund?” ask yourself, “How will you refill a depleted emergency fund?” “How will you handle an unexpected recurring expense?” There are many situations when the emergency is bigger than the emergency fund.
The number one benefit of tracking investments: You are aware of your future goals, you appreciate how much you need to invest for them, and whether or not you can invest that much, you have a target. Knowing where you stand is the first to appreciate how far you need to travel if you need some inspiration to get started, check the personal financial audits from our community linked at the end of the article.
Number two: I often listen and re-listen to the excellent money management classic The Richest Man in Babylon, and each time I learn something new, I find a new article idea. One of the earliest known mentions of “pay yourself first”. When we track investments, we get a sense of accomplishment – that is, we find some balance between current and future expenses (the reason we invest).
Number three: When you pay yourself first (if you can), tracking expenses becomes unnecessary (IMO) and essentially an academic exercise. Budgeting is essential when money is tight, and you struggle to make ends meet. Once you can regularly find a surplus – when paying ourselves first is possible – budgeting is unnecessary. We invest first and spend the rest.
Budgeting builds discipline and gives you an insight into personal inflation. Once you appreciate the importance of discipline in spending and the inflation rate, your overall portfolio has to keep pace with after-tax; it becomes superfluous. However, it is a therapeutic regimen for some: What 25 Years of Tracking Expenses Taught Me.
If you need some assistance in this regard:
For someone under 30 reading this, I urge you to do everything possible to get to this position first – where you can invest some amount (any amount) regularly. This is the first step to building wealth.
The next step is to increase the amount we can invest by as much as possible every year. Our income should increase, but our expenses should not grow simultaneously! Again, quoting the richest man in Babylon – increase thy income!
If you believe your income is low and you do not see it increasing too much in future, then do everything possible to learn new skills or have a side hustle to increase your income.
Children with financially secure parents should be told to qualify, build skillsets as much as possible, and become professionals or entrepreneurs instead of run-of-the-mill salaried guys in their early 20s. There will be a long struggle, and you will not be able to invest anything in your 20s or even up to your mid-30s. Still, you can easily catch up later with essential money management commonsense and higher salaries.
The results of a retirement calculator would always look impossible to achieve (otherwise, there is something wrong with the computation!). See, for example, We lost sleep after using a retirement calculator! This is how we recovered. However, we must have the hope, perhaps even a vision, that we will earn more and invest more in the future.
The trick to succeeding with anything in life is to work consistently without expectations and any sign of an obvious reward for our efforts. Investing systematically is a simple example of this activity. Tracking investments helps you stay on course. It reminds you of the progress you have made or reminds you (painfully) of the distance that you need to cover.
For our family, diligent goal-based investment planning and tracking for 10-plus years have been life changers. It has transformed us from middle-class subsistence to financial freedom: 15 years of mutual fund investing: My Journey and lessons learned.
This is the average rate of increase in monthly investments for retirement. I lost the 2016 data due to a hard drive crash (for the last few years, I have worked entirely on OneDrive). I started investing in mutual funds in a small way in June 2008, but it was only in 2010/11 that I started proper goal-based investing.
| Year | Average Rate of increase in monthly investments |
| 2023 | 15% |
| 2022 | 4% |
| 2021 | 24% |
| 2020 | 27% |
| 2019 | 25% |
| 2018 | 28% |
| 2017 | 35% |
| 2015 | -1% |
| 2014 | 22% |
| 2013 | 25% |
| 2012 | 19% |
I recommend maintaining a 10% increase in investments yearly or 70-100% of your monthly expenses. This will get tougher with time, but we must try. Investing 2-3 times monthly expenses would be necessary for early financial independence aspirants.
In my case, it is a sheer providence that I have been able to achieve an investing annualised growth of 18% consistently (rate of increase in investments each year). My investment annualised return, that is, the rate of increase in market value, is about 16% (from June 2008 to Sep 2022) – less than my investing CAGR 🙂 And it fluctuates a lot more! See: My retirement equity MF portfolio return is 2.75% after 12 years! I tracked my investments more often than I have tracked their value. So I see this as a just reward for the effort.
Tracking investments each month for each goal has the same benefits as tracking our exercise regimen with an app or watch. It gives you a small control over the controllable and lowers your fear of the future.
Many youngsters assume paying ourselves first would be depriving ourselves of the pleasures of life. This is not true. The sole purpose of money in our lives is to get spent for our benefit. Investing is a way to ensure we can continue to spend happily in the future. So we need to find some balance between spending today and developing an ability to spend the same way tomorrow. How we find this balance is personal and up to the individual.
This is the template I used to track investments: Download the free monthly financial tracker. Users of the freefincal mutual fund and stock portfolio tracker can upload this sheet onto their existing Google Sheets file.
Need some inspiration to get started?
Check out some personal financial audits from readers.
These published audits have had a compounding effect on readers. If you would like to contribute to the DIY community in this manner, send your audits to freefincal AT Gmail. They could be published anonymously if you so desire.
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Dr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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