Happy New Year everyone!
Did you accomplish your financial goals last year? Any resolutions for 2016?
The goals I set last year were mostly a success. Setting firm and measurable financial goals kept me motivated throughout the year. I’ve made some exciting progress.
My 2016 goals are similar but need to account for potential uncertainty during the year, both with my rental property, and possibly my career. I’m also contemplating a few multi-year goals that may require building a bigger opportunity fund.
I’m not usually a resolution kind of guy, but this year I made two important ones. They’re inspired by my kids. Read on to learn what they are.
Financial Goals Recap for 2015
I set four specific and measurable financial goals in my goal setting blog post last January:
- Reach $6,700 In Forward 12-Month Investment Income (F12MII)
- Receive $5750 From Investment Income
- Save $36,200 in Tax-Advantaged Accounts
- Reduce Top Holdings Weight and Income Percentages to Below 20%
Let’s see how these panned out.
Goal #1 – Reach $6,700 In Forward 12-Month Investment Income
Crushed this one. I met this goal in September. But the recent condo rent increase pushed the numbers way up. My forward 12-month investment income (F12MII) as of December 31st is $7,227.28. Last year at this time, that number was $5,122.74. That’s an increase of $2,104 and year-over-year growth of 41%!
My multiple streams of investment income flourished in 2015 and I’m looking forward to healthy growth in 2016. Keep an eye out for a full investment income report for December in the next week or two.
Goal #2 – Receive $5,750 From Investment Income
2015 was the first year I tracked investment income received so I have nothing to compare it to. But beating my goal felt awesome.
The process of tracking this information is somewhat tedious, but worth it.
72% ($4,441) came from dividends. 14.5% ($891) from the rental property. 10.5% ($643) from peer lending at Lending Club. And the last 3% ($200) was interest on cash.
Goal #3 – Save $36,200 in Tax-Advantaged Accounts
Hmmm… I kind of forgot about this one during the year.
OK, just went back over the numbers. Here’s how I did.
- 401k savings – $18,000 (Pass)
- RBD Roth – $5,500 (Pass)
- Mrs. RBD Roth – $0 (FAIL)
- College 529 Savings – $8,700 (Pass)
TOTAL $32,200 – FAIL by $4,000
This goal was a failure because we never funded Mrs. RBD’s spousal Roth IRA. We have until April 15th before we lose that tax benefit. So if we can assembly the money in the next few months, we’ll make sure to do it (it’s part of the master plan). I’ll be especially inclined to make the transfer if markets continue to fall in the first months of the year.
Though not part of the goal, I did receive more than $4,000 from my employer’s 401k match. That brings me up to where I set the goal. So not a bad year investing in tax advantaged accounts.
Goal #4 – Reduce Top Holdings Weight and Income Percentages to Below 20%
I expected this goal to be the most challenging. At the beginning of 2015, the top four stocks in my taxable stock portfolio made up 34% of the total assets. The same four stocks generated a whopping 38% of my dividend income. The portfolio consisted of 33 stocks.
Today, my taxable portfolio is made up of 45 stocks. The top four holdings, Apple (AAPL), Coca-Cola (KO), Verizon (VZ) and Chevron now make up 24.98% of total taxable assets – FAIL. That’s a 9% improvement over last year, but I missed my goal by 5%. And Chevron really helped me out by tanking with oil prices in the second half.
I’ve owned these four stocks longer than most of my other holdings, so it’s no surprise they make up a large percentage of the portfolio. But I need to keep focused on diversifying further every year.
As for the percentage of dividend income, I missed my target again. The top four dividend paying stocks now make up 29.66% of my yearly dividend income – FAIL. That’s still a big improvement, down from 38%. AT&T (T) replaced Apple as a top four dividend payer. Phillip Morris (PM) and Helmerich & Payne have also entered the mix. But I really need to build more income by increasing the size of smaller holdings, particularly those in my no-fee account at Loyal3.
Financial Goals and Resolutions for 2016
I don’t like resolutions and almost never make them. When I do, they aren’t serious and I break them. But this year will be different because they’re less out me, and more about my family.
For 2016 I’m making two.
- All workdays I will shut off my smart phone between the hours of 4pm and 7pm.
- I will develop plans and start preparations for a near-term, pre-retirement lifestyle adjustment.
The first is a change I knew I needed to make for my kids’ sake. Then this opinion piece about parenting in the Wall Street Journal helped me to make the commitment (must read for all parents of young kids).
Monday through Friday, I’m usually with my kids from 4pm to 7pm. That’s the time between when I’m done with my day job, and when my kids go to bed. I’m incredibly fortunate that I get to spend nearly every day with them during these hours. We do awesome stuff together.
But I often find myself sneaking looks at my smart phone to read, comment on my blog, take in after-market news, peruse Twitter, or sometimes do extra work. The kids hate it.
For this year and beyond… and this is going to be a tough one… I’m going to POWER OFF my smart phone for those three hours every day. The only exceptions are if my wife needs to communicate with me, a pressing phone call is expected, or if I’m running errands alone. Other than that, I am not allowed to have the power on when I’m with the kids during those hours. No news, no email, now work, no blog stuff.
The most important job I have is raising these kids. That’s my motivation.
The second resolution is a work in progress. I’m not ready to share any details yet, but there’s some major aspects of my life that I believe I can change for the better. Better for me, better for my family.
My resolution is to start preparing for a major lifestyle change in the next three to five years. The general goal is to work less and have more freedom sooner, rather than wait until I fully retire.
I’m keeping my financial goals somewhat less aggressive this year to create wiggle-room for planning Resolution #2. On top of that, some uncertainly lies ahead due to the potential sale of the condo rental, and a possible near-term career change (for the better). I’m still leaning toward selling the condo because it’s a lousy use of capital. Selling the condo would produce a six-figure cash windfall. Initially it would lower my forward income by a significant amount.
Since the sale is a good possibility this year, predicting forward income (F12MII) is more challenging. So I’m scrapping that goal from last year, but continuing to track F12MII to see where it goes.
Six figures in cash is serious dough. I don’t know what I’ll do with it yet. But such a windfall could lead to some grand opportunities. Non-traditional lifestyle ideas are starting to develop in my head, which lead me back to Resolution #2. I want to spend this year thinking bigger.
But that won’t stop me from continuing to build my income streams.
Here are my 2016 financial goals:
- Complete Goal #4 from last year – reduce top holdings weight and income percentages to below 20%.
- Save $30,000 in tax advantaged accounts.
- Invest no less than $2,000 of new capital each month into stocks and Lending Club.
- Receive $5,200 in dividends and $1,000 from peer lending activities.
And there you have it. Goal #1 is a continuation, and will probably be a priority each year as my portfolio grows.
Goal #2 is similar, but smaller than last year to build in some flexibility. $30,000 is still a lot of cash to sock away.
Goal #3 is not an average. I want to hit a minimum of $2,000 every month. Some months my income is lower due to the timing of my pay, commissions and the calendar. So making sure my investable cash flow is always greater than $2,000 will take some planning, frugality, and consistent budgeting.
For Goal #4, I separated dividends and peer lending since my total F12MII may be difficult to predict. It’s possible I’m low-balling these. But as I mentioned, I want to build up that opportunity fund so I can create opportunities.
Overall, I’m happy with the results of my investing pursuits in 2015. None of the stocks I own cut their dividends, and most of them provided a healthy increase. I was aggressive with investing new capital into dividend stocks and peer lending, and profited from IPO investing too.
This year’s goals are similar, but I’m expecting a few significant changes in my broader financial picture, making forward income more challenging to predict. My goals are less aggressive than last year because I may want to set aside more cash to plan for bigger ideas and to give my family more long-term options.
Family inspired me to make two resolutions for 2016. I can’t remember the last time I made a real resolution. So I’m excited about and committed to both of them.
Resolution #1 is an immediate improvement to the quality of time I spend with my kids during a critical period of their physical and mental development. Raising these kids is my #1 priority.
Resolution #2 is meant to expand my vision of what lifestyle is possible in the next three to five years. Now is the time to start preparing for a change.
What goals and resolutions did you make for 2016?
Photo courtesy of Ryan McGuire at Gratisography