I have tracked the amount invested for my goals in the same Excel sheet for the last 14 years (2011 to 2024). This sheet only tracks the amount invested and not its current market value (for this, I use a Google Sheets Tracker). These are some lessons from the journey.
Between 2010-11, my retirement planning cash flow projection was in place, and it was scary. The monthly investment was less than the calculator* said (with unrealistic fixed asset allocation!). More importantly, I had to set the annual investment increase to 10%.
* I started building retirement planning calculators in 2010, culminating in the freefincal robo advisory tool.
That is, if I invest Rs. 10,000 each month in one next, the next year it would be 10% more and so on. This was the only way to reduce the gap between the initial investment required and the initial investment made.
The catch was future investments quickly increased. At 10% a year, the investment would double every seven years or increase by 50% every 4-5 years. If our income does not grow as fast or our expenses grow faster, we cannot increase our investments by 10% yearly.
This uncertainty is common, but we can only invest what we can. What matters is, starting early, investing as much as possible, increasing the investment as much as possible and yearly review.
If I look back at the investments made in the initial years, it seems trivially small. That is the power of non-linear growth. We shall only consider the invested amount and how it has increased year to year. The status of their market value is reported here: Portfolio Audit 2023: The annual review of my goal-based investments.
This is the average rate of increase in monthly investments for retirement. I lost the 2016 data due to a hard drive crash (for the last few years, I have worked entirely on OneDrive). I started investing in mutual funds in a small way in June 2008, but only in 2010/11 did I start proper goal-based investing.
| Year | Average Rate of increase in monthly investments |
| 2023 | 15% |
| 2022 | 4% |
| 2021 | 24% |
| 2020 | 27% |
| 2019 | 25% |
| 2018 | 28% |
| 2017 | 35% |
| 2015 | -1% |
| 2014 | 22% |
| 2013 | 25% |
| 2012 | 19% |
I recommend maintaining a 10% increase in investments yearly or 70-100% of your monthly expenses. This will get tougher with time, but we must try. Investing 2-3 times monthly expenses would be necessary for early financial independence aspirants.
In my case, it is a sheer providence that I have been able to achieve an investing annualised growth of 18% consistently (rate of increase in investments each year). My investment annualised return, that is, the rate of increase in market value, is about 17% (from June 2008 to Mar 2024) – less than my investing CAGR 🙂 And it fluctuates a lot more! See: My retirement equity MF portfolio return is 2.75% after 12 years! I tracked my investments more often than I have tracked their value. So I see this as a just reward for the effort.
Tracking investments each month for each goal has the same benefits as tracking our exercise regimen with an app or watch. It gives you a small control over the controllable and lowers your fear of the future.
Many youngsters assume paying ourselves first would be depriving ourselves of the pleasures of life. This is not true. The sole purpose of money in our lives is to get spent for our benefit. Investing is a way to ensure we can continue to spend happily in the future. So, we need to balance spending today and developing an ability to spend the same way tomorrow. How we find this balance is personal and up to the individual.
This is the template I used to track investments: Download the free monthly financial tracker. Users of the freefincal mutual fund and stock portfolio tracker can upload this sheet onto their existing Google Sheets file.
Observations and lessons
- You are aware of your future goals. You appreciate how much you need to invest for them, and whether or not you can invest that much, you have a target. Knowing where you stand is the first step to appreciate how far you need to travel.
- The amount we invest (and the time it is invested) is more important than the return we get.
- We cannot plan for our long-term goals without assuming investment will increase. A 10% year-on-year investment is a bit optimistic but just about manageable.
- Even that rate of increase would look daunting initially, but we will have to put our heads down and keep investing (with a plan + yearly reviews)
- There were months I could not invest, and years I could not increase the investment. Keeping track of these and making up for them later is essential.
- If there is one reason for my financial independent status, it is disciplined tracking and systematic increase in investments without worrying about returns.
- Naturally, not all of us have the same income levels and cash outflow (expenses + debt), and not all of us can invest at the same pace. Some of us may become financially independent decades later or not at all. Despite all this, try, we must fill our cups as much as we can without cribbing about opportunities others got clueless about their circumstances.
- We can only deal with the cards we are dealt with. Hard work and toil without expectation are known to change the deck.
- I have seen this baffling argument: If my cup is never full, it might as well be empty. Surely, this deserves an award!
- Each time our salary increases, we must ensure expenses do not increase at the same pace or at least at a faster speed. That is just a fancy way of saying live with your means.
- A mountaineer must plan but cannot look up to see “how much more” every few minutes. Big journeys begin with small steps. The problem is, in a 1000-step journey, we expect results five steps later.
- If you are a young earner reading this, track your invested amount more frequently than their market value, keep expenses at bay, and increase investments by at least 5% annually. Wait a decade to see the difference!
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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