Financial bloggers losing focus
Confession: I go crazy whenever I discover another finance blog updating the world on that person’s net worth. All of the pie charts, ratios and data comparisons, and growing bars indicated dollars held—AHH!
Instead of counting the fluctuating pennies in our Coca Cola stocks, we should, as financial bloggers, be looking for a way to make investments toward the future. The greatest investments cannot be calculated TODAY—owning a successful and growing business, owning a home that’s in an under-valued market, buying stock in an undiscovered beast like WalMart in 1995, etc. But when you cash in on those investments in forty years at retirement, prepare for the specific $ sign in your net worth to leap upward. Some of that money exists TODAY, yet you cannot show it on a net worth statement. Well I guess you could spend $400 to get your property reappraised every month. Think that’s silly? Not if you’re counting your net worth to the penny—might as well be accurate.
We should be finding ways to establish money-generating avenues that can multiple for the future, not necessarily for today.
And yes, I do make a monthly net worth update that is nowhere near accurate because most of my money goes toward future expectations. I like to chart spending in our personal lives and investments to make sure we’re keeping on track . If you truly aim to be a successful $$ man, I don’t see how you can know your exact worth.
I think that showing the world my net worth updates every month online and throwing a virtual party when I’m up $500 is off the track. Yeah it all sounds cool… yet shouldn’t we be aiming for financial freedom not X dollars in the bank?
Yes and no.
The big picture is the ultimate objective for most of us(typically a financially secure retirement). However the smaller goals serve at least two useful purposes:
1. a measure of progress; and
2. a means of staying motivated and maintaining self discipline.
August 22nd, 2006 | #
[…] Katie over at Aridni has a very interesting post today on Financial Bloggers losing focus. What? You don’t read Aridni? You should. Seriously. […]
August 22nd, 2006 | #
Well, planning for a financially secure retirement does not mean generating income, really. At least not directly. It means generating the wealth that will generate the income passively.
What’s the difference? I could own a stock worth 2 million dollars, which gives me dividend income of $20,000 per year. But if I sold the stock and put my money into bonds and funds I might be able to make $60,000 a year. And if all you need is $60,000 per year, then you might be able to do it with just $6 million and a riskier but rewarding venture (like owning your business).
In my stock example, I could have paid $100,000 for a stock that’s worth 2 million when I retire. Great investment for retirement because I can then put my money to work at standard interest rates and make my living. Less worry.
Knowing your networth on a regular basis ensures that a) you’re growing as much as you should be (% wise) and b) how far you are away from a cushy retirement.
and lets you calculate c) how long you’ll take to get there if you were to get the same growth.
August 24th, 2006 | #
I agree that it is important to know the values of your assets and the costs of your liabilities, but I’m not sure of the value of nailing down everything to the penny.
Yes it’s good to know the growth rate and distance from your retirement, but I believe there isn’t a great value in counting every grain of wheat in the silo. Knowing that you have it 2/3 full and the current price is $X per Y the value is $Z.
I’m not 100% sure if this is what Katie was getting at, but I think that there is value to knowing things, but there are limits.
In the time you take to count everything and catalogue your dvd collection and check the current market values on them, you could have spent the time making enough money to expand it. (Not that I am saying DVD’s are a good investment!)
August 24th, 2006 | #
(Just noted an error - that $6 million in my post should be $600,000, sorry)
I think Katie meant two things:
1) Don’t do a to-the-penny calculation of your networth everyday. Key phrases are “to-the-penny” and “everyday”.
2) You should focus on making long term growing investments instead of calculating your networth today.
For 1) I think you need to have a process to measure your networth. Doing it everyday is silly perhaps, but exciting. But the process ensures you can track your networth and growth anytime. (I know people who don’t know what they own or what it’s worth)
For 2, Katie says “most of my money goes toward future expectations.” so current networth figures aren’t accurate. But they are! They tell you where you are today so you can figure out how much you’ve grown tomorrow, and extrapolate that to retirement. If $10,000 becomes $100,000 in 20 years do you feel good? Even if I told you it was at $90,000 in the first 10 years, and grew only $10,000 in the last 10? Your past long term investments need to be cashed to fund your future investments - and you can’t do this if you don’t calculate networth and growth.
Accuracy is subjective. Penny calculations are the only result of a true networth calculator - I get my stock portfolio value everyday to the last penny because it’s an auto updating process. Without this process I’d be doing mental math, and that’s a waste of time. My feeling is you need penny results, but you don’t need to overanalyse them.
August 24th, 2006 | #
A mystery value: the worth of your home
It’s all about the market and the particular buyers looking at the moment. Your house could be their DREAM home, so they’ll pay the bazillion-dollar price tag you put on the house. Someone else likes the house–not love, just like–so he’ll offer you half.
The question is, who do you sell to? The answer is going to affect your future wealth FAR more than today’s article about how you save 15 cents a year by cutting dryer sheets in half.
August 25th, 2006 | #
Actually it’s not who to sell to that is the question - that answer is obvious - but it’s about how to make your home the dream home that matters. Also it’s about not waiting for the dream buyer but to get the cash in a bearish or stable market.
SOme people might say “15 cents a year is good; drops make the ocean”. That’s a load of bull. I would focus on earning more; and making what you have earn even more.
In the end it’s never about 15 cents or $500. It’s all about percentages - the higher you can get out of your investments, the safer and faster your retirement is.
August 26th, 2006 | #
I think I agree that I have been surprised to find how many personal finance bloggers spend so much time majoring in the minors. Trying so hard to pinch a penny here, and a nickel there, that they are missing half the equation- investing some of the money saved, increasing what you earn, and developing paassive income streams for retirment. My partner in crime and I over at NLL are both financially free to the secure level, she to the comfortable level, and we are working using different strategies of paper investing, real estate investing, and building businesses towards the “rich level”. We are passionate about women being financially free-
August 27th, 2006 | #
[…] Katie presents Financial Bloggers Losing Focus posted at Aridni. She debates whether it’s worthwhile to keep our net worth statements updated to the penny or to spend our time focusing on our investments. […]
August 28th, 2006 | #
[…] Katie presents Financial bloggers losing focus posted at Aridni, saying, “Thanks for hosting–” […]
August 29th, 2006 | #
Deepak Shenoy makes a great point. We should always focus on calculating the %ROI. I have heard people complaining that a business opportunity was a scam because it only made them $1800 when the price to join was $1200. True, they may not be rich and financially secure, but they got a 50% ROI. Not too shaby if you ask me…
August 29th, 2006 | #
You make an interesting point in your article but there’s no way of quantifying a “future expectation” nor can you say with any certainty that you’re investing in a “beast like Wal-Mart”. Someone who invested in the beast called Dell might today be crying as the company falters.
August 30th, 2006 | #
[…] Are personal finance bloggers losing their long-term focus by posting monthly net worth updates? Katie over at Aridni.com thinks so! We should be finding ways to establish money-generating avenues that can multiple for the future, not necessarily for today. [ Source ] […]
August 30th, 2006 | #
[…] Welcome to the September 14, 2006 edition of carnival of project management. Katie presents Financial bloggers losing focus posted at Aridni.If you’re looking for some technical advice on PM tools, Pawel Brodzinski presents MSF: Version 4.0 versus Version 3.1 posted at Software Project Management, which explains the differences between Microsoft Solution Framework version 3.x and 4.0. […]
September 14th, 2006 | #
[…] Katie presents Financial bloggers losing focus posted at Aridni. […]
September 14th, 2006 | #
Food for thought!
Aridni has a thought-provoking observation on financial bloggers - what do you focus on, and is that what you should be looking at?
Instead of counting the fluctuating pennies in our Coca Cola stocks, we should, as financial bloggers, be looking for a …
September 20th, 2006 | #
I’d call this a case of discussing whether half-empty makes sense versus half-full. Granted, you shouldn’t miss the woods for the trees, but let’s not forget that without the trees, there are no woods.
Sure, I keep looking for the next opportunity - but these don’t come every day, and in the interim, keeping my eye on the small stuff also counts. Besides, the skills gained through learning the small stuff help significantly in finding the next big one!
September 20th, 2006 | #
I always find it odd when one person assumes that all others should be thinking about the same things and in the same manner as that one person. Personally, I just write about my experiences and my life, as money flows in and out.
If someone told me what I *should* be writing about, I’d simply say that if they don’t like what I *do* write about, there are other places they can go. Of course, if someone *asks* me to write about a topic and I feel I’m capable, I’ll probably do it… But for someone to tell me what I *should* be writing about takes a lot of nerve.
“Confession: I go crazy whenever I discover another finance blog updating the world on that person’s net worth. All of the pie charts, ratios and data comparisons, and growing bars indicated dollars held—AHH!”
Katie, no one is forcing to read anything you don’t want to read about. Move on. I post my net worth updates for mostly the same reason I track my finances in Quicken. Complaining about other people’s blogs on your own blog is pretty low class, and what I’d expect from a teeny-bopper blog. I am sorry if that offends.
Todd may be right in that it could be more beneficial to spend time developing sustaining income streams than to spend that time counting every penny spent, in fact I agree and have said as much, but that doesn’t mean that that’s what everyone should be writing about.
There are kinds of pf blogs I don’t particularly like to read. I just don’t read them, and my life is fine and not frustrating.
September 20th, 2006 | #
Round Up - Carnival of Personal Finance #63
This week’s Carnival #63 of Personal Finance was hosted by 1stMillionAt33. It was a wonderful carnival of information sharing with around 50 quality posts. Our post Research - From Junk to Joy ! was published under the category Saving Tips. In the c…
October 5th, 2006 | #
Thinking about innovative business ideas, new business models, etc., has occupied a great deal of my life. Admittedly, I have always more of a dreamer than a doer. However, using blogs to chronicle my ideas, lay out plans, recieve feedback, has enabled to stay on task more effectively. Yes, there are plenty of financial tracking blogs. Take from them what you can and move on.
October 22nd, 2006 | #
[…] Katie presents Financial bloggers losing focus posted at Aridni, saying, “Thanks for hosting–” […]
October 24th, 2006 | #
[…] Aridni: Financial bloggers losing focus. Less counting pennies, but more money-generating […]
September 27th, 2007 | #
[…] over a year ago, we wrote a controversial post about personal finance bloggers. Since many of you may not have been reading Aridni then, we […]
September 28th, 2007 | #