Achieving and maintaining financial freedom isn’t a matter of chance—it’s a journey that requires discipline, careful planning, and consistently tracking the right metrics. Many successful investors follow similar habits that help them stay on track, but the common thread is simple: what gets measured, gets managed. By monitoring specific financial milestones, you can secure your financial future with greater confidence.
Here are the key financial metrics successful investors track to stay on top of their game:
1. Your Wealth Window
How many months until you reach financial independence?
Tracking your wealth window, or the number of months left until you’re financially independent, makes the goal more tangible and motivating. By breaking down your long-term goal into smaller, more digestible milestones, you can gain clarity and stay focused on the path ahead.
2. Saving Percentage
What percentage of your income are you investing for the future?
A high saving rate is one of the clearest indicators of financial discipline. Aiming to save and invest at least 20% of your income consistently is a key habit among successful investors. The higher this percentage, the faster you’ll build wealth and financial security.
3. Global Equity Allocation
Are you properly diversified with global investments?
Long-term growth in your portfolio is largely driven by equity investments, particularly in global markets. By diversifying into global equities, you can capture growth opportunities in multiple regions, which can safeguard your portfolio from the volatility of any one market.
4. Retirement Income Needs
How much income will you need in retirement?
Understanding your future income needs is essential for setting effective savings goals. It can be hard to save effectively if you don’t know what you’re aiming for, so estimate your retirement expenses carefully and adjust your contributions accordingly.
5. Retirement Income Shortfall
Is there a gap between your expected income and what you will actually need?
Once you’ve calculated your required retirement income, compare it with your expected sources of income, such as pensions, investments, or other savings. If there’s a shortfall, it’s important to adjust your strategy early—whether that’s by saving more, adjusting your asset allocation, or cutting down expenses in retirement.
6. Income Protection
Are you adequately insured against the unexpected?
Growing your wealth is important, but protecting your current and future income is equally critical. Ensure that you’re covered against risks like disability, illness, or unexpected job loss. Having the right insurance in place provides security and peace of mind, allowing you to focus on growing your wealth with confidence.
Final Thoughts
Tracking these financial metrics regularly allows you to take proactive steps and make necessary adjustments to ensure you remain on course. Achieving financial independence is not just about working hard or saving randomly—it’s about knowing exactly where you stand, where you want to go, and making disciplined choices to get there.
Remember: the journey to financial freedom is in your hands, and by keeping these key metrics in check, you’ll be well on your way to a secure future.
Arrange an Exploration Call with us today to find out if Wells Gibson is right for you.
