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.
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.
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.
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.