Father Sez

From and to parents - parental advice to our children on personal financial management and life.
Search Blog

Keeping accurate investment records and its impact on investment “luck”

Friday November 30th, 2007 by fathersez

I have been losing money in stocks and shares ever since I started “investing”. However, I never kept track of my investment losses (or the very few and very far in between gains).  

In late 2004, I decided that this was not on and formulated a system to keep track of my investment activities. 

First, I thought about and wrote down my investment strategy. 

Second, I opened a separate bank account (joint account with my wife), for this purpose and deposited the seed money into this account. 

Three, I used an Excel file and created 4 sheets. 

a)    One for my monthly balance sheet and benchmark comparisons. The items in this sheet are:-


i)                  Monthly closing of the KLSE Composite Index, 

ii)                Monthly change in the Index (%) 

iii)             Cumulative change in the index for the year to date (%), 

iv)              Monthly % change in my “Investment shareholder funds”, which is (ix) below plus or minus the realized and unrealized gains / (losses)  

v)                Cumulative change of (iv) for the year to date.  

This shows me where I stand every month against the benchmark index as well as against my targeted investment returns goals.    

Balance Sheet 

vi)              My account, which would represent drawings from or extra contributions to the bank account,(excludes the seed capital) 

vii)           Bank account  

viii)         Cost of shares/stocks owned at month end

          a.    Add / Deduct Marking to Market 

ix)              Start up capital (my seed money)

         a.    Add / Deduct Profit / (Loss) – Realised

         b.    Add / Deduct Profit / (Loss) Unrealised, i.e. marked to market. 

b)    Sheet Two shows the details of the bank account, all deposits from sales of shares/stocks as well as additional contributions or withdrawals I make. This also includes dividends and interest received. 

c)     Sheet Three is for the details of my account 

d)    Sheet Four is on monthly stock transactions I make.

    This sheet shows:- 

    i)        Date of transaction,

    ii)       Stock Name,

    iii)     Number of shares bought and at what unit price,

    iv)     Total cost,

    v)      Market price as at end of month,

    vi)     Profit / (Loss) for sales done during the month 

At the end of each month, I close off the month’s transactions by inserting a new sheet and naming it by month. The profit/(loss) for the month + the balance as at the end of the previous month is carried into the balance sheet as realized P & L.  

All these may seem cumbersome and complicated, but it takes me only about ten minutes a month to complete the recording for the month. After all I do not have many trades a month.  

My records and benchmark comparisons are based on the month ending closing buying prices. I ignore brokerage and stamp duty for purposes of balance sheet. 

This system has resulted in some changes in my investment management. Seeing the index’s change against the changes in my “investment shareholder’s funds” gives me a clear indication on where I stand for the month. In fact, it is a snap to do this at the end of any day I choose.  

And knowing where we are is clearly the first step to getting to where we want to go.       

At the end of the year, I just close off the year’s results by deciding how much I should use as the opening seed capital for the next year. The difference between the amount of seed money for this year and the decided seed money for the next year is knocked off against my account.

If I have a credit, then I withdraw the amount and it is banked into other accounts, like paying off our mortgage or car loan etc, or a small celebration. 

This is the system I have followed since 1st January 2005 and it has proven very useful. This includes details of every stock transaction that I have done since the above date. 

Though my “funds” were down by 10.91% against the index’s decline of 1.90% for 2005, they were up 95.45% against the index’s 21.83% gain for 2006. Thankfully, 2007 also looks good so far.  

The absolute amounts involved, will not put me amongst the “markets movers and shakers”, anytime soon…..Sigh H

However, this ability to see and gauge my actual performance against benchmarks and against my internal targets has made a difference in my investment “luck”.

Bookmark and Share

3 Comments for “Keeping accurate investment records and its impact on investment “luck””

by dadude
On November 30, 2007
At 2:37 pm

Does this come with a manual? ;-) Thanks for sharing. Being a non-financial guy, I have to read that posting a little bit slower. How about the counter of your choice? (tips, tips)

On December 2, 2007
At 6:02 am

[…] Keeping accurate investment records and its impact on investment “luck” « Father sez…… Though my “funds” were down by 10.91% against the index’s decline of 1.90% for 2005, they were up 95.45% against the index’s 21.83% gain for 2006. Thankfully, 2007 also looks good so far. […]

[…] presents Keeping accurate investment records and its impact on investment “luck”, and says, “For many people, keeping detailed records of investment activities is often […]

Leave a comment


Blog Subscription

Like what you are reading?
Subscribe to my RSS Feed