It may seem a bit odd to be setting goals 3 months into the year (isn’t this usually done before New Year’s?), but after looking at my portfolio, I decided now was as good a time as any. Plus, putting together a plan on paper (this website) will give me more incentive to succeed.
As you may know, I only recently started investing in a taxable account this past January. Prior to that point, all my investments were held in index funds, primarily in retirement accounts. My goals for the retirement accounts remain the same – invest in index funds and build up a large nest egg for later in life.
For the taxable account, this goal is slightly different. Although in the end, I would also like the size of this portfolio to swell to enormous proportions, the primary objective of the taxable account is to allow me to reach early financial independence. This will be accomplished through the means of constructing a passive income stream that will bring in more income than I need for spending. Makes sense, right?
I won’t be purchasing any index funds in my taxable account. Instead, I will invest in the leader(s) of key growth industries. This will be accomplished by employing a strategy primarily geared towards investing in dividend paying (and increasing) large cap, blue-chip stocks. I have taken it upon myself to be my own money manager! How exciting… and scary at the same time 😉
From January 2012 through the end of March 2012, my taxable portfolio has grown from $0 to $30,000. Contributions have been made every month, and so far I am averaging between 4 to 7 transactions a month. I try to invest a minimum of $1000 during each transaction to reduce commission costs ($4.95 for each trade).
So without further ado, here are the investing goals for the remainder of 2012:
1) Total Value of Taxable Account = $60,000
To accomplish this first goal, I need to contribute the following amount each month for the remaining 9 months of the year:
In general, due to bills and regular expenses, I cannot meet this monthly amount as is. In order to achieve this goal, I will need to strategically sell ESPP stock throughout the course of the year. I will aim to contribute $2000.00 to the taxable account each month. Over 9 months, this would amount to:
The remaining $12,000 will need to come from ESPP. There are 2 ESPP distributions throughout the year, and each distribution is ~ $6000. Just enough.
Though I feel this goal is obtainable, by no means is it going to be easy for me to achieve. In the past, I had taken comfort in knowing my ESPP distributions were always just around the corner and could be deployed for use on a rainy day. By setting this goal, I can no longer rely on ESPP funds to bail me out. Hopefully things work out ok!
2) Beat the S&P 500 and Dividend Yield > 3.0%
I would like the taxable portfolio to beat the S&P 500, of course. Also, would like to see the dividend yield achieve > 3.0%.
3) Fully fund Roth IRA = $5000
This goal should be a bit easier to obtain than the previous. After all, this is something I have been contributing to every year since 2006. How will I be funding this account? Usually I rely on bonuses and pay raises. Or with any spare money I have lying around. Generally, I prefer to do lump sum investments for the Roth IRA, so I don’t have to think about it too much. Timing the market is always hard to do, but I don’t try to invest until I feel a major pullback has occurred. Some years I succeed, and some years I don’t. I am not too concerned with this, however, as I prefer to just dollar cost average over the course of the many years of the investment, as opposed to dollar coast averaging over the course of any given year.
4) Fully fund 401k = $17,000
This goal is third on the list, and the one I am least concerned with meeting. I would like to contribute up to the company match, for sure, but after that, I may stop contributing short of the maximum, should I find myself unable to. In the past, I have generally had enough left over to contribute up to the maximum. A this particular moment in time, I am more concerned with building up my taxable account than worrying about a retirement account I won’t be able to access for a long, long time.
5) Pay Raise and Promotion
This would be icing on the cake! :0)
And for the non-investing, life goals:
1) Learn how to competently snowboard (be able to carve blues with ease!)
2) Learn how to cook (beginner dishes at this point)
3) Use my D-SLR camera a lot more (take more pretty pictures)
4) Travel more (tour the east coast and other parts of the country)
5) Be more active (snowboard in the winter, hiking, climbing, biking in the summer)