Networth = Total Assets – Total Liabilities
March has come to a completion. It is time for a financial health check up! The growth percentage is calculated using the difference between the networth figures on 28 February 2019 and 31 March 2019.
I am adding a new section in the networth update from now on and that is Personal Cashflow.
EXPENSES
Dad was admitted to A&E due to pain caused by prostate problem. That was a big scare for me. Fortunately, it was not something serious and no big medical bill was chunked up. It was a one off $128 fee. I took up an investing course which cost $487.50 and it was money well spent. These are the only significant expenses for this month.
PERSONAL CASHFLOW
For the past 15 months since I started tracking my networth, I always wondered how can I increase the speed of increasing the networth. On the first of every month, I automate the process of transferring money to the different bank accounts for specific uses such as daily expenses, bills, insurance and investing.
Only recently, I did up an excel to track all my expenses since 1 January to 31 March and noticed that my personal cashflow is not that healthy. To explain further, Net Cashflow = Inflow – Outflow. A high net cashflow means there is extra money building up. Inflow can be income from salary, part time jobs, gigs and things you sell. Outflow is simply money spent.
The Net Cashflow/Net Income percentage for January, February and March is 26.87%, -34.25% and 34.49%. The negative percentage for Feb meant that I spent more than what I earned for that month. But that is because of the half-yearly insurance premium and other stuff that I had to pay.
I would love the Net Cashflow/Net Income percentage to be as high as possibly, preferably above 30%.
INVESTING
Shiller PE Ratio for S&P 500 is now 30.50, higher than previous month’s ratio of 30.42. As most indices recovered significantly, my portfolio is lacking behind significantly. Even as the market surges higher, I would love to deploy more cash. It is important not to invest blindly, without understanding.
I did buy one stock this month and that’s about it. I don’t trade stocks and I don’t believe frequent buying and selling can generate huge returns.
Example of Compounding
The total cashback (from credit cards) accumulated for this month is $25.53. This amount has been transferred to my investment account. A high cashback may not be a good thing as it means I am spending quite a bit.
Compound $25.53 at 1% per annum for 30 years = $34.41
Compound $25.53 at 5% per annum for 30 years = $110.34
Compound $25.53 at 10% per annum for 30 years = $445.58
The difference can be up to 12 times. This is the magic of compounding.
FINAL THOUGHTS
Debt/Networth Ratio: 2.29%
Investment/Networth Ratio: 29.97%
Networth Month On Month Growth: +3.27%
Debt/Networth Ratio dropped to 2.29% from last month’s 2.61% as one of my credit card final installment has been paid off. Networth Month On Month Growth is 3.27% and I am very glad about it.
Do you track your networth? Let me know in the comments section below. Thanks for reading.
Disclaimer: www.engboonhow.com is an opinion based website. I am not a financial advisor, and the opinions on this site should not be considered as financial advice.
I track my expenses (excluding rental) and salary from doing extra shifts.
I dont track net worth.
I find it too much work!
Hi Joy. Tracking networth needs a bit of work. I only do it once a month, which takes less than 15 minutes. If it is too much work for you, an easier way may be to ensure that you have more cash in your bank accounts than debt. That should be simpler.