Tracking the Coin

Or “Monitoring a diverse portfolio without doing your head in”. It’s my experience that money is a funny thing – it takes time to start building, then accelerates rapidly and surprisingly both up and down. Take for example paying down a loan. As the interest charged each month drops, the payments on the capital have much greater effect and all of a sudden, the loan diminishes rapidly. It’s very exciting. The sames is true as money goes up – but the initial part of both financial activities is slow. How can we manage this without losing our attention from the bigger picture – particularly with money in shares or index funds?

As a rule, I update my net worth at the start of every month. It’s the only time I really look at loans, share value and cash assets. This is the most often I want to pay attention to this. Why? Simply because putting more time into it is counterproductive. I can’t influence these areas on a day to day basis – the real gains are made over time. Using automation to pay a little extra on the loans means over time they are paid off more quickly – but the time span is still years. The share market is falling at the moment and it’s daily movements are like a yo-yo. There’s no point looking at it that closely when I have a “buy and hold” plan in place. I’m more concerned about how many shares I have and what dividend will be paid (to be reinvested). Given I have low risk appetite and no interest in share picking I’m free of having to pay a lot of attention to the market.

Cash assets I do pay a little more attention to – if only because I draw from here on occasion for various activities around the farm and houses. But still, it’s a long time between activities there. None of these assets are really big enough to be making huge gains yet – but they will over time. In Australia we have mandatory superannuation – this is a retirement fund that 9.5% of our income is paid in to. I can’t access this until I’m 67 years old (which is a long way off). While I do care how this is going (down at the moment), there isn’t any real influence I can bring to it on a day to day, weekly or even monthly timescale. It’s building steadily over time and the gains it makes grow proportionately even if it drops on occasion.

I have just completed my yearly net worth update and also the compare and contrast around where I think I should be up to. The good news is, I’m ahead on repayments and my assets are slowly building. The bad news is my index funds – in particular the Vanguard International Index fund (ASX: VGS) has not performed… but I’m holding that for the dividends and for the long term. That account won’t be 12 months old until later this year so I’ll review it then. And I need to find out how the distributions work so I can include that in the review.

To conclude – monitoring your money doesn’t need to be a daily grind. Find an appropriate time frame for your finances and then keep to that. Don’t let it lapse – you still need to be rigorous in managing things but it doesn’t have to involve watching a stock ticker all day. Good luck.

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