How Often Do You Formally Monitor Your Investment Progress?

I have read a lot on CP about people developing investment plans, business plans, etc.

I was wondering how often do people FORMALLY monitor their progress against these plans and, if things aren’t going according to plan (which they rarely do), they take corrective action. If you don’t, then one could say you are not getting the full value from your plans. Your plans have become a ‘dust collector’, not a ‘living document’.

I formally monitor my progress at the end of every Quarter and have done it for the last 12 years.

In January 2004, I wrote my Financial Independence Strategic Plan. In it, I gave my wife and myself 10 years to reach our goal. To get there, I knew I had to monitor our progress and, when required, take corrective action. Otherwise, we would risk 10 years disappearing and being nowhere near our goal.

I used a rule from my project management background. That is, to increase the likelihood of having a successful project, one should use the 3% Rule. This rule states that one should monitor a project’s progress every 3% of its timeframe.

In my case, my ‘project’ was 10 years or 520 weeks. So, the 3% Rule states I should monitor my ‘project’ every 15.6 weeks. I reduced this back to 13 weeks or every Quarter (namely, end of March, June, September and December) as it is a lot easier to remember when to do it.

I monitor 4 KPIs’, namely:
1. Total Assets - hopefully these will increase over time
2. Total Liabilities - these increased when we were actively investing but have decreased since we retired
3. Net Worth - hopefully this increases over time
4. SMSF Balance - hopefully this increases over time. Since we retired, this balance has continued to increase even though we are self-funded and must take out 4% every year

Probably, this approach is not for everyone but it worked for us. We reached our goal in 7 years and retired in 2010, even though we went through the GFC in2008/9 (that was not part of the plan).

Since retirement, I still monitor the above 4 KPIs every Quarter. The SMSF Balance is the critical one as it provides the income we use to live on. If it continues to go up, we know we have a sustainable income stream. If it continually drops over time, we might have to take corrective action.

As a result, we have very detailed records of the last 12 years of our investment journey. We have no idea of the previous 27 years because we didn’t monitor it, except I know we started in 1977 with $50 in my wallet.

If you formally monitor your plans, I would love to hear what you do and when. If you don’t formally monitor, hopefully I inspired you to consider doing it.

 

Yes, once a quarter i review the market conditions and take a peek at comparable properties. Then once a year I also do valuations via residex & price finder.

Do the same for clients properties.

 

Daily

 

Glad to hear. I didn't want to be the only one doing this.

For properties, I do something similar to what you do.

In Total Assets, I also include my shares and managed funds (hence, I look up their latest prices), bank accounts (minus credit cards balances and updaid bills already received), cars ('re-valued' every 3 months), and personal belongings (re-valued once a year just prior to paying our contents insurance).

It might sound like a lot of work but I do it all in Excel and obtain most of the numbers on the Internet (so, it is just a copy and paste). It doesn't take that long.

I graph the 4 KPIs so that I can easily see what is happening with them over time.

 

Hourly

 

Why daily?

 

Sure

 

I'm in the middle of exploring add value/development options on each property. This is requiring daily input with the relevant trades/parties. Plus, looking for more properties in the same areas, so I know every single comparable that comes on the market/and or is sold.

 

How many properties did you purchase over 7 years?

 

Do a rough back of the envelope - assets / liabilities / cashflow calculation once in a while when we need to know where abouts we are.
Probably happens once a year.

 

We had just bought an IP in December 2003 (the month before the plan). Then we bought 5 IPs in the next 5 years.

We already had one business prior to the plan. We bought another business in 2007 (3 years into the plan) and sold both businesses in 2010 (7 years into the plan). These businesses, the impact of the GFC on these businesses and their subsequent sales kept us very busy in 2009/10 - didn't have time or $'s for IPs.

 

I carry out business forecasting around once a month.

Personal investments looked at "informally" around once a quarter.

I sit down with a planner once a year to go over everything (not so much the property stuff - but how super/business is tracking and whether insurances still adequate).

Cheers

Jamie

 

Interesting topic .

In regards to personal and business finance and goals, I tack these daily.

For my share portfolio, I have two sets of share strategies:
1) Shares that I HOLD for a Devidends - Track them once a month.
2) Shares that I TRADE: TWICE A day lol.

With properties:
1) My PPOR I get a valuation done once a year.
2) Investment properties: My IP's are on low LVR's so i usually review them every three months.

 

I trade and develop property so daily for me

 

Once a year to formulate strategy and make a financial goal for the year. Keep a regular eye on property sales so I know the relative value of my properties. Weekly overview of cashflow vs budget.

 

How do you go about getting these valued @jpcashflow ? Do you get a professional valuation done (and pay for it), use a real estate agent or two in order to tell what they think they'd sell for, or do you just look for similar properties in the area in order to get a rough sale price? Or some other way entirely?…….

 

The joy of being a broker - free vals

 

...and the joy of being a good investor is to get a good broker like yourself to get you free vals

 

Do you monitor your cash-flow also (referring to passive income)?
I'm assuming these will most likely increase every year due to rising rents.

 

@Taku Ekanayake For me, I mostly monitor capital growth. I know some folks like to count their $10 a week here and $30 a week there etc. I don't find value in that. I rather work towards and count the equity I am creating.

Over the years as my properties became positively geared..I never bothered to count the collective pittance of cash flow. I just focused on smashing out that CG and obsessing over that. I knew that when the time comes, it would be so easy to convert the equity created to meaningful cash flow for myself.