Wealth tracking: Manage your wealth with Spf wealthTrack

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Wealth tracking and monitoring can be very useful in reviewing your financial situation and determining how successful you are at growing your wealth. By tracking and updating the performance of your investments on a regular basis, you can be able to estimate the stage or status of your financial independence. Over time, you will notice the gradual growth of your wealth. Watching the steady growth of your wealth alone can be motivating. Even if this growth is observed to be in the negative direction, it could still guide you to make the necessary corrections in your financial planning. Wealth tracking can therefore make you accountable and responsible in your investment decisions. In addition, tracking your wealth makes you take control of whatever you own. At a particular stage in life, your assets may be broadly spread out especially if you take particular attention to investment diversification. During this stage, wealth tracking remains a practical option to keep proper inventory of the numerous assets.

About Spf wealthTrack

Spf wealthTrack is a Spreadsheet template simply designed for wealth tracking. It can be used to track various asset categories and compute some metrics related to one’s wealth. Spf wealthTrack can be edited to suit the needs of different individuals. Due to the frequent ups and downs on the market (which reflects on personal investments), it may be appropriate to update the Spreadsheet less frequently, at least every month. Basically, Spf wealthTrack comprise of two main parts- assets’ columns and metrics’ columns. Data in the assets’ columns are to be manually entered by the user. The input data are then computed in the metrics’ columns to yield useful information for decision making. For easy identification and differentiation, all data that are manually entered by a user are colour-coded BLACK (with exception of liabilities which is coloured in RED). On the other hand, data that are computed by the software are colour-coded GREEN.

Spf wealthTrack is available on our downloads page. Click on this link to download.

Assets’ columns of Spf WealthTrack

The assets’ columns cover the various asset categories (and liabilities) usually owned by an investor. These are, but not limited to, fixed deposits, Treasury bills, mutual funds, stocks, bank accounts (Savings and Current), cash, and real estate. Asset could also be the value of one’s business or any venture with earning potential. Liabilities include loans, credit card debts, pending taxes, pending insurance premium payments, pending rentals to your landlord, etc. Different liabilities can be add up and entered as a whole in the liability column.

Figure 1: A snapshot displaying assets’ columns of Spf wealthTrack

As noticed from Figure 1, various asset categories are already listed. However, the names of these assets can be edited to suit the needs of the user. For example, instead of Stock 1, Stock 2, Stock 3, etc., the user may rename them as GCB stock, CAL stock, GOIL stock, etc. Similarly, a user may edit rental property 1 and rental property 2 as Kasoa land, Adenta store, etc.

In wealth tracking, what really counts as an asset can sometimes be debatable. For instance, while many consider their personal belongings such as wardrobes, electronics, etc. in their assets list, I personally don’t support this idea due to their depreciating nature. That is, the values of such possessions keep decreasing over time instead of growing. Besides, it would not be in one’s interest to sell and generate money from his personal belongings. On the other hand, some personal belongings (such as personal car) can however be so valuable that it makes sense to include in one’s assets, in particular if it forms a major percentage of the person’s valuable list.

The issue of whether personal property (primary residence) can be classified as an asset or not is similarly arguable. We usually spend money to maintain our primary residence without earning  cash from it. It should be noted that primary residence or any form of personal residence can only generate cash when turned into rental property or sold out. If you don’t intend to sell your personal residence, why would you then list it as an asset? As you may agree, many would prefer not to sell (liquidate) their primary residence. Nevertheless, in a dire situation, one may be forced to sell it for survival. The computed total assets in Spf wealthTrack is therefore categorised into two- The first computation (TOTAL ASSETS) exclude the value of primary residence while the second computation, (ASSETS, BANKER’S VIEW) adds up the value of primary residence.

Metrics’ columns of Spf WealthTrack

The metrics’ columns consist of total assets, net worth, month-on-month gain, and various portfolio percentages.

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Figure 2: A snapshot showing metrics’ columns of Spf wealthTrack

The net worth computation in column W (see Figure 2 above) excludes primary residence while that of column X (bankers’ view) considers primary residence.

The month-on-month gain (or loss), as shown in column Y refers to the net worth increment between the current and the previous month. This can be positive or negative depending on the overall performance of your assets. The portfolio % refers to how the net worth is distributed over the various assets categories. The portfolio percentages can guide you to rebalance your assets to suit your financial goals. For example, in the snapshot above (Figure 2), real estate contributes to at least 91% of the investor’s net worth. The investor may therefore decide to increase his investment in other asset categories such as fixed income or equity mutual fund in order to reduce his exposure in real estate.

To what extent do you trust your investment brokers?

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There are various services generally provided by investment brokers in Ghana. Out of these offered services, the common ones are trading of stocks on clients’ behalf, management of investment funds, and investment advisory services. Investment brokers’ role in the financial sector can therefore not be understated. Nevertheless, as humans as they are, they equally make mistakes. These mistakes range from petty ones such as carelessness to critical ones that can result in devastative effects on clients’ investments. Hence, as investors, it is essential to be alert and be aware of the extent to which our investment brokers can be trusted. It is always important to ensure that our investment brokers (and advisors) really have our interests at heart. This can be attained by paying attention to typical attributes such as honesty and transparency, competency, reputation and track record.

Investment brokers are expected to be honest and transparent without withholding vital information from their clients. Information such as clear fee structure, performance updates, financial statements and reports should be readily available to clients to make informed decisions. Getting regular feedback from your brokers should not be too complicated. Certainly, investment brokers must keep their clients in the loop and present them with the available lucrative [investment] options for decision making. However, it is unfortunate that the nature of their job, these days, appears like that of salespersons- They tend to be primarily concerned about revenue generation for their financial institutions (employers). Investment brokers seem to rather focus on the promotion and marketing of their investment products. Of course, the more they sell their investment products, the more revenue they make through management fees and other commissions. After all, what commission or management fee would NTHC brokerage make if it endorses FirstBanc Heritage fund instead of NTHC Horizon fund? Similarly, you don’t expect Databank financial services to recommend SAS Fortune fund to its clients while they have their own [Epack] investment fund. In much the same way, it would be unheard of if SAS Investment Management recommend Epack mutual fund for their prospective clients even if Epack overwhelmingly performs better than other funds. Clearly, investment brokers and their financial institutions favour their own products which may put their credibility to test.

The reputation and track record of brokers must also be carefully examined when trust is concerned. A little background check and public perception can serve as useful starting point. How long has the institution or individual operated as a broker and how has their past performance looked like? Although historical performance may not guarantee future prospects, they still serve as useful measures when dealing with brokers. Undoubtedly, there exist a few good brokers who have not operated in the industry for so long. Nothing therefore prevents investors to give them a try. However, it is important to do so in a cautious approach. For instance, one may start dealing with new investment brokers by testing their services on a small scale. That is, by initially investing smaller amounts with them and increasing their investment in a gradual manner as they keep building trust. It’s like taking a bath with hot water of unknown temperature. You don’t pour the hot water on yourself right away. You cautiously test it, probably by dipping your finger slightly in it. A key factor of equal consideration, while looking at investment brokers’ reputation, is whether they are licensed or not. You have worked hard for your money and surely deserve to keep it safe from fraudsters. It is worth to note that the potential for fraud lessens when dealing with licensed brokers. The Ghana Stock Exchange provide details of all licensed brokers where you can do some background check on their date of incorporation, key personalities etc. The Security and Exchange Commission (SEC) similarly publish names of licensed mutual funds.

Furthermore, it is essential for existing clients to pay attention to details such as data accuracies in their transactions. A couple of weeks ago, I happened to bump into the Facebook page of an investment management firm. While going through people’s comments and reviews, I came across one that specifically advised colleagues to regularly check on their accounts to ensure accurate details. The person was commenting on grounds that some deposits he made some time ago did not reflect in his account until he followed up with the investment firm. In fact, I couldn’t stop grinning after going through his review. This is because I have particularly witnessed, on some occasions, similar errors made by my investment broker. On two separate occasions, they misplaced my purchasing order form for stocks. Realising unusual delay in the purchasing of stocks I had requested for, I had to follow up. Surprisingly, they couldn’t locate my completed forms so I had to pick another form and start over. This definitely led to further delay in the stocks purchase. On another occasion, they mistakenly purchased a different company’s stock instead of the one I had ordered for. There was this day too when a deposit I made into my equity fund account rather ended up in my money market fund account (managed by the same broker). Imagine if this had found its way in a third party’s account. I also recall one painful experience whereby an investment firm issued me a closed account number for telex (electronic) transfer.

As you can see, such carelessness and poor data records may translate into grave consequences in the management of clients’ investment. If they could lose my purchase order forms, mistakenly purchase a different company’s stock instead of the one I requested for, issue me a deactivated account number for telex transfer, what is the guarantee that they cannot commit similar critical mistakes in the management of our funds. Mind you, this was even one of the oldest and respectable brokerage firms in the country. How much more the ‘baby-toothed’ ones?

The bottom line is that, investment brokers and advisors can be professionals as far as investment services are concerned. However, instead of sitting back and leaving everything in their hands, you can play an active role to ensure that your investment stay on track. In other words, never leave your investment on autopilot, trusting the experts to always do things right. In addition, avoid falling prey to brokers’ personal interests. Personally take interest to access and compare investment options of different firms and then choose the ones that align with your interests. Finally, you should periodically monitor your investment transactions and balances. If you don’t have access to online services, you may request or physically go to their offices for your account statements on a regular basis.