Why do up a financial plan when you don't make sure it works?

It is a strange phenomenon. For the past 5 years, there has been lots of say about planning for retirement, growing the nest egg, starting young and it goes on. Don't get me wrong, I am not against all that, in fact I am an advocate and a true believer in planning ahead, setting that financial goal and working towards it.

What disturbs me is that although there are a lot of emphasis on doing up the long term financial plans, there is a general lack of focus on what is more important than the plans themselves, which is working the plan, tracking it and making sure it works.

When you see a financial planner today for retirement planning, they would ask you to fill up a questionaire and based on that they compute the required amount that you need to accumulate by the time you retire. All looks good on paper. It probably tells you that if you invest a certain amount monthly or yearly assuming you get a certain return on your investment per year, you will reach your financial goal and live happily ever after. That's good, all you have to do is invest an amount of money regularly and get a return on investment per year for the next 30 years. Simple enough.

Reality however is quite different. You can be a good accumulator, investing once in a while, you buy some stocks, some unit trusts, some insurance linked plans etc. You invest more when you can have the spare cash but some times there just isn't much left to invest. The fact is that our investment pattern over a period of 15-30 years is unlikely to be as simple as the paper plan. Most people after a while, cannot remember when or even how much they invest. Even if they keep all the statements from the investment companies, they can probably tell you nett nett if they make or lost money. So, what happened to the initial plan to accumulate over time and get a return on investment for 15 to 30 years? Do you really know where you stand at the moment?

How likely are you to achieve your financial goals if you are not even tracking the progress of your financial plan? Knowing what assets you own now is just not enough. For most people except the blessed few that is born with enough to retire, we need our financial plans to work in order to achieve our financial goals. And in order to make sure it works, we need to keep track of your progress.

This is what I would suggest. First, forget about tracking your investment like a company. Companies need to do annual report that is why accounts are closed yearly and a profit and loss is determine at the end of each year. For the individual that is investing for long term, the yearly report is not useful. What you should be interested in is the rate of returns on your every dollar starting from the first day you start investing. Track every dollar you invest because you need every one of them to work hard for you, not just part of your money performing well and the rest in the dumps.

You need not be the investment guru or expert but there is no excuse not to at least play the role of the manager in your investment plan. No one will have more interest in your financial plan than you. You job is to focus on the right numbers to make sure you are still on track. In my opinion, you have to do at least that to deserve financial independence and eventually financial freedom.