Building wealth has become second nature to me. It’s what happens when you write more than 1,300 personal finance articles over seven years. Not only does writing help you get smart about the topics you write about, many of the articles themselves are moneymakers thanks to the internet!
Of course, everything may go to hell once the next financial crisis hits. But hopefully, all the articles that talk about cash management, not being too proud to work side hustles, and following a recommended net worth allocation will help you feel less pain when the hammer falls.
One key to growing my wealth is through meticulous tracking of all my financial accounts. I used to write everything out in a spreadsheet each month. This practice helped me zero in on underperforming accounts so I could do something about them. Nowadays, I’ve got my accounts aggregated online so everything is automated.
Here’s what happens with me every week
1) Personal Capital e-mails a performance report. They compare my various investments (You Index) to the S&P 500, a US Bond index, and a foreign stock index. If I’m tracking within +/- 2% of the S&P 500, I’m content. I don’t even bother logging in to check out my net worth allocation in such a scenario. All I really want to do is grow my net worth by 2-3X the risk-free rate of return each year (3.5% – 6%). I only do a thorough net worth analysis when I’m underperforming or losing money.
According to my latest weekly update, my overall investments are up about 6.16% in 2016. The outperformance over the S&P 500 is largely due to a large holding in bonds, which have outperform stocks. My five investment portfolios are up between 3% – 6.5%. But if I’m to take a look at my net worth growth, the figure is higher due to strong appreciation in SF real estate and good cash flow from my business.
2) In the same weekly e-mail, I view my current month-to-date spending versus the prior month’s spending to see if everything is normal. The basic tenet of always spending less than you earn is always pertinent. Based on an October spending report, I’ve spent about $30,000 this month, which is $53,212 less than what I spent during the same time in September. High five for being so frugal! Or, what the hell was I spending $80,000+ on in September?! I don’t see no Range Rover in my garage. Oh yeah, I added to some existing stock and bond ETF positions given both markets sold off.
Each month, I try and invest $5,000 – $20,000 on average in various investments. I invested more in September because my dollar cost averaging system propels me to press when there is more volatility. Now, I’m back to my normal monthly investing cadence and will wait for new opportunities to arise. The biggest opportunity I see is waiting for SF real estate to correct by ~10% and buy another single family home at the end of 2017/early 2018 before the IPO lockup periods expire for the 10,000+ Uber and Airbnb employees.
3) After spending three minutes reviewing my weekly report, I just go about living my life without worrying about my finances. I know that worst case, I’ll find out in one week if something is wrong e.g. hacked credit card, bad investment, etc. Now think about what could happen if you only go for a full health checkup every two years. It’s possible the day after your checkup, you contract some type of cancer. If left untreated for two years, you might be dead!
The goal of automated financial tracking is for everybody to spend more time living life than worrying about money. If you have a good financial structure in place, all you need is time to grow your wealth.
Regular Health Monitoring Is Crucial
Although I’m relatively good at making money, I’m bad at staying lean. The benefits of regular health monitoring are equally as beneficial to health and fitness as regular financial monitoring is to wealth. Yet, for some reason, I never bothered to track my fitness and caloric intake until this year!
Like so many of you, every year I have a goal of losing 5 pounds. Yet every year, I fail by staying the same weight at roughly 165 pounds at 5’10”. I’ve been this weight for 16 years now. This year, I’m on track to gain 5 pounds. What the hell is going on? I still play tennis three times a week and I even started lifting weights twice a month to build some strength and definition.
My weight gain all started in the summer of 2015 when my sister and nephew came to visit. I treated them to bubble milk tea drinks every other day for a week. I thought they each had about 150 – 200 calories MAX given a can of illicit Coke has 140 calories.
I was wrong! A typical bubble milk tea drink with lots of extra goodies has a whopping 1,000 calories! In other words, I was drinking 7X more calories than I thought. Of course I gained weight a couple months later with my newfound addiction. Stubbornly, I didn’t know why until the summer of 2016 when I finally downloaded a fitness app called MyFitnessPal. Until then, I just chalked up my weight gain to old age.
For those of us with a penchant for gaining weight, I strongly believe it’s because we have NO IDEA exactly how many calories we are eating. Our health IQ is so low, by the time we figure things out we’re much heavier!
Take this 9 question quiz and see how you do. Answers are at the bottom so don’t cheat. You must get 5 or more right to pass.
So how did you do? Everybody should have gotten at least two questions right if you guessed on all questions. My thesis is that only folks who scored 5 or more questions right are in excellent shape. Full disclosure: I only got four right.
Answers: Watermelon 678 calories, Baklava 334, Caesar Salad with dressing 1,441, Starbucks Peppermint Mocha 410, Four Korean Fried Dumplings 572, Big Mac 550, Ruth’s Chris ribeye 1,152, One piece hamachi nigiri 51, Recommended caloric intake of 5’10” man trying to lose 1 lb/week 1,560.
But wait! I hear the cacophony of complaints about how my test is unfair! What the hell is baklava? I’ve never eaten no hamachi nigiri before, only Big Macs! The answers all seem so similar! Wah. Welcome to my world.
When I was taking the SAT for college entrance, I was constantly thinking to myself, who the hell wrote these questions and answers? Surely not an Asian guy who grew up in Zambia, The Philippines, Malaysia, and Taiwan before coming to America for high school. After doing some research, sure enough, the SAT was created by a Carl Brigham, a professor of Psychology at Princeton University in 1926.
Here’s an interesting quote from the Wikipedia page:
“In his 1930 paper “Intelligence Tests of Immigrant Groups,” Brigham recanted his 1923 analysis of the results of the Army Mental Tests. Due to having used prejudicial test administration and analytical techniques in his original research, he acknowledged that his conclusions were “without foundation” and stated, “that study with its entire hypothetical superstructure of racial differences collapses completely.”
Man, if the SAT was created by someone with my background I’d surely kill it! Hamachi nigiri and Korean fried dumplings for all!
Track Everything Often
If I can’t lose 5 pounds, I’m damn sure not going to gain 5 pounds this year. Running around the tennis court with dumbbells tied around my legs isn’t going to help performance. Further, I don’t want to die early from heart disease before my kids grow up to be contributing members of society.
One of the greatest paradox I see today is the existence of unhealthy looking rich people. If you are rich, one of your main goals is to try and live as long as possible because life is so darn good! All you can eat caviar (85 calories for 100g) baby! Don’t artificially truncate your lottery winnings by dying young.
Most of us here are rich or will become rich one day. Therefore, it’s only logical that we continuously track our finances and our health. Setting financial and fitness goals in an app that keeps you honest will help you succeed. Or, you can simply hang out with professional athletes. Whichever way is easier.
Readers, anybody out there who is rich and overweight? Do you track your finances religiously yet don’t track how much you eat and exercise? Why do you think there’s this disconnect? If you’re poor, wouldn’t it be even more important to be fit since it doesn’t seem great to be poor and unhealthy?