Why You Need an Investment Diary (With a Backup!)

Digging through my old emails, I found this one I sent to my brother five years ago…

> On May 27, 2015, at 10:03 PM, Joel <@gmail.com> wrote:

> Good news: We have signed all closing documents and transferred closing money to the escrow account. Just waiting for confirmation that all was settled correctly. We are officially homeowners as of 5/27/15!

> Bad news: I lost ALL of the digital data I have been gathering for this property. I kept everything on a USB stick, that encountered an error yesterday. Sadly, I have only back-up emails with some documents I’ll have to collate again.  The worst thing is my daily log of calls/email activity and lessons learned. I wish I could transfer the knowledge to someone, but i guess it’s just all in my head moving forward.

Bugger! I really wish I still had those notes right now. This was back in May 2015, when my wife and I were purchasing our first out of state rental property.

Actually, this investment was a series of “firsts” for us…

  • First time investing out of state.
  • First time buying “sight unseen.” We had never visited the property, and never even met our real estate agent or property manager in person. Whole process was managed remotely.
  • Our first investment together as a couple (we were engaged at the time, but not married yet, so mingling money and sharing debt was still a strange new feeling)
  • First time getting an investment loan. And the first loan with a new bank.
  • First time inheriting existing tenants – (one of them was mid-eviction while we were in escrow, so we got to watch the whole court process happen during the purchase)

I learned more in that 60-day period than I learned in the whole previous year of study. I was smart enough to keep an awesome daily log of activities, but dumb enough to lose them immediately. :(

Advice to new investors: Start an investment diary. Take notes on everything you learn. Record your wins, losses, and lessons learned. (and keep a backup of it 🙃)

I was given this same advice as a young investor. And while I’ve done a half decent job of taking notes, I wish I had done better! Detailed notes from the past are handy in so many ways.

Why New Investors Need to Start an Investment Diary

Here are some reasons I encourage investors, particularly *new* investors, to document everything they learn:

  1. Writing stuff down helps you retain information better: No secret here, most of us learned this in school… Whether handwriting or typing, you remember more when you take notes.
  2. It helps create a “repeatable process”: My original goal of writing everything down for the rental purchase was so that I could create a personal “playbook” for buying my 2nd, 3rd, and more properties. Constant note taking along my journey builds a solid book of knowledge for future investments and hopefully profit.
  3. It limits repeating past mistakes: Some of the best lessons learned are from trial & error. Making silly mistakes or hitting unforeseen challenges. My past notes help remind me to avoid the same problems. (Eg. Note to self: Stop day trading. It only ends in tears. Keep buying that mutual fund!)
  4. Theory vs. practice: There’s a million books on investment strategy and How To Guides… But putting that information into practice brings a whole lot of experience and emotions you can never plan for. Documenting the feelings along your journey is a really important part of investing when looking back … and that’s solid investment advice no matter if you’re investing in the stock market or real estate or for retirement vs. another long term goal. It applies to everything!
  5. New epiphanies:  When I read my past notes and learning materials, I see brand new ideas and thoughts I couldn’t see at the time. It’s weird to think that your future self can learn from your current self.
  6. Others can benefit from your knowledge: The main reason people follow this blog is because J Money documented his net worth growth in real-time. Following his journey was so useful because a lot of it came from a beginner’s perspective. Your notes could help other individual investors save time, money, and build their stock portfolio!
  7. Knowledge > Money:  Would you rather have Warren Buffett’s wealth or Warren Buffett’s knowledge? OK, bad example, don’t answer that — you would take the $$$… but you get the point… The knowledge of how to fish is sometimes more important than the fish itself. Treasure the knowledge you gained from any investment decision, not just the money made!

Take notes about what? Where should I write this stuff?

How to Create an Investment Journal

Here’s a couple examples and things you might want to try as you make a record of your investment process …

Things you learn from books and podcasts:  Let’s say you regularly listen to the Choose FI podcast… Start up a spreadsheet with 3 columns: (date | episode | biggest takeaway). Then each time you listen to an episode, make a quick note in the spreadsheet. After 1 year you will have 100 personal FIRE notes to look back on. Any time you are feeling uninspired, overwhelmed, or want to recall a specific memory, just go back to your spreadsheet.  You can do the same with technical investing podcasts and personal finance books you read.

Notes when tracking your net worth:  A great example is J$’s net worth reports. He included a ton of valuable notes! Not just for your reading pleasure but for his own records later in life. Each month he detailed new investments he tried, things that went well, things that went wrong, changes in his income and his spending … Valuable to us, but valuable to him more so. Here’s how to start tracking your net worth.

Call logs with accountants, agents, property managers: I’ll admit I’ve gotten lazy in this area… Back when I was first getting to know my property manager, I would keep a brief log of each call we had. It helped me record action items and answers to questions I forgot immediately after hanging up. Very handy when you’re starting new business relationships or interviewing a bunch of potential partners.

Starting a business or side hustle: Open a new Word document and write 3 quick points on *why* you want to do this new business. (The main reason people give up on their side hustles after a few months is because they forget the reasons why they started them in the first place!)  In this document, you could also write your next actions to take, small and large goals, any risk you anticipate, lessons you learn along the way, etc.  Doesn’t have to be a formal business plan – Any sloppy notes are better than no notes at all!

Write down your growth goals: I keep a very basic goals tab in my net worth tracking sheet with about 6-7 bullet points of things I want to do for the year. I don’t really update or modify it much, but just the act of writing goals down brings me closer to achieving them :)

I know note taking can be boring and monotonous — but that’s what some people think about budgets — and we all know how $exy budgets are! You’ll be thanking yourself later in life when you’re reading your investment diary from years past. We all know that past performance is not indicative of future results … but knowing what we did back then helps us make decisions about what to do now.

What about you – are you a note taker? You bloggers out there, have you noticed any huge benefits in simply writing stuff down and documenting your processes?

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12 Comments

  1. The Millennial Money Woman October 16, 2020 at 5:41 AM

    Joel,

    This is another great post. I agree that the more you write down your goals – be it personal or financial goals – the more likely you will strive to accomplish these goals.

    There is just something really liberating about putting a check-mark next to a goal that you achieved!

    I did keep a physical book dedicated to just finance – basically recording the finance best practices. Keeping and updating this book has helped me a lot in my path toward financial freedom.

    Thanks for sharing!

    The MIllennial Money Woman

    Reply
    1. Joel October 16, 2020 at 10:22 AM

      Nice! Some of my notes I will probably never read again, but just the act of writing them down burned the lesson into my brain :) Glad your book is helping you along too!

      Reply
  2. Financial Fred October 16, 2020 at 8:10 AM

    Great advice, Joel. I am a note taker and really like some of the benefits you mentioned such as trying not to repeat past mistakes and practice vs. theory.

    Additional items I usually try to document is when to sell and what I planned to use the investment for. As to your point people forget why they did the investment in the first place so they probably will also forget what they planned to do with it as well. For example, did you buy it for your child’s education, a future place to live or a retirement fund? I am not saying you can’t change what you use it for but knowing what you planned to do with it and when you planned to sell it, I find helps.

    I think being a note taker is crucial as did you know you are 42 percent more likely to achieve your goals if you write them down? Yes, it is that simple and yes, I notice a difference being a blogger it helps with your points above.

    Fred

    Reply
    1. Joel October 16, 2020 at 10:55 AM

      When I look back at sometimes I remember the wins and highlights more than the losses and pain points. Like selling xyz stock for a big profit, or making a good deal buying a house. I find that writing down the hard lessons keeps my ego in check :) Cheers Fred, have a great weekend buddy!

      Reply
  3. TPM October 16, 2020 at 1:40 PM

    Great idea.

    I keep an journal of my stock investments. I write down why I made the purchase, the research that led me to the decision and the probabilities I forecasted for investment growth. It helps me keep focus if something bad happens or maybe the story changed and the reason for my investment is no longer valid.

    Reply
    1. Joel October 16, 2020 at 3:29 PM

      I like that you include the research that led to the investment. That’s awesome!

      Reply
  4. freddy smidlap October 16, 2020 at 2:14 PM

    i can definitely say writing about stock investing moves and strategy on my blog has helped me make better decisions. i write a little malevolent missy series where she buys one stock per month and i really had to think that through to have a beginner’s perspective. if you’re gonna put that out there with potential for potential public ridicule it’s good to be clear and to be successful.

    Reply
    1. Joel October 16, 2020 at 3:35 PM

      I’ve read some of your Missy series, good stuff! Putting info out publicly is a great way to force better research :) Also, sharing your notes/journal/blog etc gives others a chance to comment and provide input on things you may have missed. Public ridicule sucks, but some people out there can be extremely helpful. Cheers Freddy, keep up the good work!

      Reply
  5. Ashley October 20, 2020 at 8:04 AM

    Great tips! I’m starting to take investing seriously so a diary is definitely the right way to keep me on track.

    Reply
    1. Joel October 20, 2020 at 1:06 PM

      Awesome, Ashley! Remember it doesn’t have to be overly complicated or fancy. My “diary” is actually just a collection of scribbles and notes. Sometimes i write on a whiteboard, then take a photo of it and file it on Google Drive. :)

      Reply
  6. Mike Stuzzi October 20, 2020 at 6:09 PM

    I totally agree with this. There is something about writing things down. You’ll only experience it when you start doing it!

    Reply
    1. Joel October 20, 2020 at 6:16 PM

      Definitely Mike! Don’t knock it until you try it :)

      Reply

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