Friday, January 02, 2009

Bear bullied me :(

I spent a great part of my day programming the excel spreadsheet that tracks my life - tuition, investment portfolio and cash flow/balance sheets. The last two spreadsheets caused a great deal of hardwork because I discovered I made a few grievous mistakes.

1. I discovered that I had forgotten to average out my hongguo portfolio after buying in a tranche at 0.250. It means that my average buy price for Hongguo is at 0.40833 and not 0.4850 which I had mistaken for the past 4 months or so! This in turn affected my net worth calculation for my balance sheet.

2. This one is serious. In my balance sheet, I'd realised that I double counted my earning/losses. This is because I had put my investment portfolio and bank accounts inside the balance sheet, so imagine this: I gained $100 as a result of a dividend, so my investment portfolio will register $100 extra but at the same time, my bank account will also register another $100 because the dividend is transferred over there by CDP. As a result, my net worth calculation registered $200 for every $100 of earnings! The same applies for losses!

Sloppy thinking resulting in sloppy accountings. This is so serious because I took so long to realise - a year in fact! To correct for this, I added back my retained losses and subtracted off my dividends earning. I'm glad I know some accounting from my self-reading, otherwise this kind of stuff will drive me nuts!

3. I had inadvertently overestimated the cash value of my insurance policies. Only my whole life plans have cash value (and only after the 3rd year onwards) but I had put all the premiums that I put into ALL policies, including those without cash value like hospitalization and surgery (H & S) plans, into my asset column. This resulted in overestimating my net worth by at least xx, xxx figures!

I corrected this error by counting only the surrender value of those insurance policies that have cash value. I only counted the cash value of the guaranteed portion, excluding the non-guaranteed portion. Call me a conservative old fool.

With these mistakes, the past year record of net worth is basically zilch...worthless information. Not a problem, I'll start monitoring from scratch again. Net worth is just a figure, I don't feel poorer after writing off my insurance assets, nor richer by getting an extraordinary gain of xx, xxx amount after accounting for my duplication in earnings/dividends.

Though it's just a figure, it still had to be accurate and reflects my financial standing in a manner that I am comfortable with. This game of wealth has its rules to obey, and the first rule is to be truthful to oneself. If you do not know where you stand, how do you know whether you've reached your goals?

Here's my score card (2 s.f.) so far:

1. Singapore portfolio : 26k unrealised losses, 23k realised losses, 45k capital in stocks

2. HK portfolio : 9.3k unrealised losses, 29k capital in stocks

3. US portfolio: 1.3k unrealised losses, 10k capital in stocks

4. Net worth : 118 k. (I know there are many definitions. For mine, it's the money that I have if I liquidated everything and paid off all my debts now)

Shocking? I need to increase the current asset of my asset by 50k this year. How to do that? Just save $4.2k per month LOH. Just? Yea, just.


Anonymous said...

what a bimbo bear !

LS said...

hmm..what a grave mistake ...

LS said...

we all learnt from mistakes anyway

Anonymous said...

haha LP, i've done the same before too(i.e. double counting), but thing is i've realised the mistake...:) it's ok, learn from them!

la papillion said...

Hi Pat,

U too? haha :) I'm glad I've got it cleared up, otherwise it'll be very misleading!

PanzerGrenadier said...


Don't worry too much about it. The important thing is that you realise your error and corrected it without any third party intervention. :)

Net worth is only a figure. It is not so much what the figure is by itself but what it does for your life and lifestyle.

To me, I track net worth because it allows me to know if I've moved nearer or further away from my goal of financial freedom which is defined by a specific net worth amount (excluding value of home).

The important thing is how your Excel worksheet tracking cash inflows/outflows and your net worth improves over time.

I like to think of my own Excel net worth and cash flow tracker as a means to manage Panzer Pte Ltd. As CEO/Chairman of Panzer PL, I have to understand my own financials if I want to float Panzer PL on the Financially Free Exchange. :)

Be well and prosper.

la papillion said...

Hey PG,

haha, well said :) I treat myself as a company too, so the figures are impt as a means to track my progress, but not so impt as a figure to worry about :)

My excel spreadsheet for my cash in/cash out is in version 2 :) I included drop down windows so that I don't have to keep on retyping the same category of expenses daily.

Hey, do u think u can share with me your super duper excel spreadsheet? Just erase your personal stuff but put in a few items to let me explore how you set it up :) I don't mind sharing with you mine too :P

PanzerGrenadier said...


No problem. Will email you today a cleaned up one.