“ In investing, what is comfortable is rarely profitable..”
Robert Arnott
Did you know that creating and accumulating wealth is a balancing act? It requires us to enjoy the present, that is, the here and now while we plan for a great future. It is also an intentional journey that has some ups & downs. It is vital to keep track of what you are doing because you do not want to wake up one day and discover you got off track a long time ago and your chances of recovery are slim.
Allow me to use the analogy of a train getting off-track. It is not the big, massive accidents that are responsible for most derailments. Most of the time it is the small pieces of unrepaired track that cause derailments.
However, If you do lose track, it is critical to guard against loss of time and loss of finances while charting a recovery path. Of essence is to quickly pivot and get back in the groove of things.
What should you be keeping your eye on?
1. Overall Financial Plan:
It is your financial life roadmap. It carries your ultimate hopes and dreams. It has achievable goals and those that look like they are a dream and a lifetime away from ever being achieved, I call them the super stretch-goals. This plan needs to be checked every so often to confirm if it is serving your purposes. Quite frankly the value of a well-thought-out financial plan cannot be overemphasized.
2. Personal Budget
Generally, budgets can be short-term, medium-term, and long-term. The long term and medium-term feed into the short term. The important bit of budgeting is sticking to it. It is no using having it drawn out meticulously and failing to stick to it month by month. What is also key is to ensure that the budget enables you to live within your means. Do not borrow to fund your lifestyle because it never ends well.
3. Savings
The bedrock of wealth growth is savings. The better you save the faster you will accumulate your investments and therefore reach your financial goals. Remember the layers of savings, start by saving for at least 6 months’ worth of living expenses in an emergency fund. Then channel your savings to pre-identified investment vehicles. As income increases, your savings should also grow.
4.Insurance:
Is there such a thing as too much insurance? I think so. However, there is nothing as dangerous as inadequate insurance. That insurance is important is not debatable. Keep track of all the assets that need to be insured, including health and your life. Review every so often the adequacy of each. It is also important to shop around for the best prices in the market
5. Retirement planning:
We have already established that hope is not a strategy when it comes to retirement planning. You dare not leave it to others, the government, your employer, or your children to decide what kind of retirement you will have. Create a plan for how much you will need to have invested by the time you retire. Contribute to a registered retirement benefits scheme, follow the Scheme’s performance, and participate in the Annual General Meetings to address any concerns you may have. Review this plan from time to time.
6. Taxes:
The first thing to do is to confirm that you are compliant. After you confirm you are up to date with your taxes, ensure you take advantage of tax planning opportunities, and these are quite a few.
7. Investments:
Tracking these is kind of a big deal. Ok ok , it really is a big deal. From how you acquire the investments, when to restructure/ rebalance the portfolios, and including the timings of disposals is very key. An overall strategy around all your investments will reduce guesswork and inject intentionality towards a common goals. Some thoughts around what to track in a couple of your investment portfolios include;
a) Land: Review your intended use for the purchased land, is it for speculation (not my cup of tea) or will you be developing it. Given its location what is the most viable use of the land? All these are questions that will help you to avoid having idle assets.
b) Rentals: If you have you transferred their management to a property agent, please check that they account correctly for all collections and taxes.
c) Business: Are you a co-owner and are you active in the business? Do you keep track of all important numbers? If it is a franchise, are you running it according to the licensee agreement? Do you have a strategic plan that the business is following, how is the performance in relation to the plan, and what do you need to tweak or change to excel?
d) Shares and equities; Do you keep abreast of the market drivers? Do you buy low and sell high? Do you reorganize your portfolio?
e) Chama: contributions and investments what is your portion? How are the funds utilized? What is the performance of the investments?
There is no blueprint that fits everyone. We all cut our coats according to our clothe. The important thing is to make YOUR own roadmap and follow it, of course, you are allowed to course-correct according to your circumstances.
So, do make sure you keep your eye on your progress and if something fails, do not dwell on it. Just get up, dust yourself off, and do the next thing. And remember if it can be done by others, it certainly can be done by you!