With 2015 approaching, I wanted to formally put together my goals for the next year. Ever since Lanny wrote about his goals last month, I have been hard at work thinking about my goals. What I like/respected the most from Lanny’s set of goals were that they were very challenging and well-rounded, containing both investing and life goals. It reminds me that while I should be focused on growing my portfolio and sprinting towards financial freedom, you still can’t forget about your life and building those memories that you will tell your kids and grandkids about. I should achieve this balance in 2015, so lets take a look at my goals for the year!
Bert’s 2015 Goals
1. Invest $15,000 of New Purchases in 2015– This is probably my biggest change from my 2014 goals. Last year, I based my total portfolio growth on the final market value and was always focused on my market value crossing XXX dollar in June, September, December, and so on. While I love seeing my market value grow and it is great watching your market value climb on days when the broader market is booming, I don’t think this is the appropriate goal for me going forward because it subjects my personal goal to forces that I cannot control. I am one October pullback, one oil collapse, one battle between Congress/the President away from watching my goal circle down the drain. The worst part is there was absolutely nothing I could do to prevent those events..nothing! The one aspect of portfolio growth I can control, however, is invested capital. Regardless of economic events, I am in complete control of how much capital I invest in my portfolio. My market value will certainly grow over time if I continue to invest capital. Therefore, I would like to add $15,000 in new purchases in 2015. This does not include employer matches for my 401(k) and capital stemming from dividend re-investment. This $15,000 will consist of new capital transferred into my Sharebuilder account from my checking/savings account. My current cost basis is $41,289.90, so adding $15,000 would grow this figure by 36% in the new year!
2. Projected Dividend Income of $2,750 – At the time of this article, my projected annual dividend income is $1,851. So in order to reach my goal for 2015, I would have to add $899 of annual dividend income to my portfolio, or 48.5%! Let’s do some quick math from my first 2015 goal. $15,000 of new purchases at my portfolio’s current yield of 3.94% would add $591 of projected annual income to my portfolio. With the impact of dividend re-investment from December 2014 (the largest dividend paying month of the year) and all of 2015, I should get some additional help towards reaching this goal, as well as the illustrious dividend increases our stocks pump to us! In addition, I have a lump-sum match for my Roth 401(k) from my employer in June, which represents half of all contributions from the prior year. With all four forces combined, I’ll be in the $2,750 neighborhood. It’ll be a challenge for sure, but I am ready and I want to grow my annual dividend income by 48.5%! Let’s aim towards blowing past $2,750 in projected dividend income in 2015!
3. Max-Out my Roth-IRA Before 12/31/15– Alright everyone, I have a confession to make. I have not maxed out my Roth IRA for the year, even though I know the benefits of maximizing my Roth IRA very, very well. I have every intention of doing so before 4/15/15 and I am going to make sure I do so, but I backed myself into a corner here. Essentially every purchase until this date will be in my Roth account until this date. How did I put myself in this situation even though I have purchased well over $5,500 in stock in the current year? I’ll share. My Roth IRA has traditionally been held through a larger institution with a person that has served my family very well over the years. He has worked very closely with family members that are not investment-savvy and always had their best interests at heart. He was not the stereotypical investor that has his best interests in mind, the focus was always on my family. Because of this, I wanted to return the favor and house my Roth IRA under his umbrella even though the stock purchase costs are significantly higher. My thought was I will make two large purchases in this account this year to reduce the impact of the cost. Over the years, I picked the heavy hitting dividend stocks such as BP, GSK, ARCP, and HCP (Which was my last purchase for this account) in this account with purchases over $2,000. I had every intention of making a large purchase in the second half of the year in this account, but my financial situation changed which threw this plan out the window. Instead of saving for larger purchases, I was scraping together smaller purchases ($500, $1,000) as the funds became available, and the smaller purchases are just not cost-effective with that large of a transaction-fee. So I continued to make these purchases in my Sharebuilder account, whose largest fee per transaction is $6.95. To fix this, I recently opened up a Roth-IRA with Sharebuilder and now I can benefit from this lower cost investing with smaller purchases (My recent purchase of IBM was the first purchase in this new Roth IRA). I will continue to hold my current Roth at this larger firm to benefit this guy, but all purchases going forward will be made in the lower-cost Sharebuilder. This should allow me to fund my Roth throughout the year as opposed to two large purchases. That’s why I am setting the goal of having my Roth IRA funded before 12/31/15, so I don’t find myself in the same situation I am in now.
4. Make $1,001 from The Dividend Diplomats Brand– I couldn’t agree with Lanny’s goal any more if I tried. In his article, he challenged both of us to make $1,000 from the Dividend Diplomats brand. I accept his challenge and I raise him $1! Take that Lanny! All joking aside, he hit the nail on the head with this goal. Every dollar of additional income puts us one step closer towards financial freedom. I am excited to work with all of you on this goal, because without you, we won’t achieve this goal.
5. Make $1,000 in “Other Income”– This is going to be the most challenging goal for the year, but the one I am the most excited for. My income streams are my employer, dividend income, and the blog. I want to continue to diversify my income streams, so I am challenging myself to earn $1,000 from other income sources. This can come from rental property (if I buy an income property this year, which isn’t the most practical), selling items lying around the house, or flipping items I can find at garage sales. This is why I am so excited for this goal, I don’t have any concrete plans on how I will accomplish this. So I will need to be creative, perform a lot of research, and try to create markets for used goods that may or may not exist. This is going to be a blast! If I am going to hit my first two 2015 goals and goal number 6, I will need to expand my income revenues. Adding $1,000 in additional income at my current portfolio yield of 3.94% will push me $39.40 closer towards reaching my goal of $2,750 in projected dividend income.
6. Beat the Dividends Diplomats Savings Challenge 6 Months in 2015– This year, I gladly accepted the challenge to save 60% of my income each month. I knew it was going to be difficult to save such a high percentage of my income, but I also knew that I could do it with hard work and determination. To date, I have monitored my expenses for 3 months and have saved 60% of my income once. I would like to increase my success rate from 33% to 50% and defeat the Dividend Diplomats Savings Challenge 6 times in 2014! While goals 4 and 5 focused on generating new income to allow myself to invest more and reach financial freedom sooner, I can also achieve this by spending less. Lanny’s classic saying is there are two ways to increase savings: increase your income or decrease your expenses. Both are equally effective. So I am challenging myself to find new ways to cut expenses to save 60% of my income 6 times in 2015.
7. Watch One of My Sports Teams on the Road– Here is my life goal for 2015. I am about as big of a sports fan as you can be. I love my Cleveland sports teams and my Buckeyes. I have been going to Indians games before I could walk, cheering on the Browns since they returned in ’99, watching some of the worst basketball (Pre-Lebron Cavs) and the best basketball (Cavs with LeBron), and missed all but two games when I attended Ohio State. So I bleed sports. While I have attended sporting events at our home, I haven’t cheered on one of my teams on the road in a really long time. It would be such a great experience cheering for your team in a hostile sports environment. That’s why I am setting a goal to go on the road and watch one of my teams play in foreign territory. I have plenty of sports to choose from, so it will be picking the right game(s). I could travel to Toronto to watch the Indians play the Blue Jays, travel to Auburn Hills to watch LeBron and the Cavs take on the Pistons, travel to Blackensburg, VA to watch my Buckeyes avenge their loss to Virginia Tech this year, or the best, I could travel into Dividend Mantra‘s old territory and watch Ohio State take on hated rival Michigan (Mantra- Let’s make this trip happen!). Regardless of where I go, this trip is going to be amazing and will surely create lasting memories.
(Picture from watching the Indians at home last year)
I can’t wait for 2015 to begin. I have 7 challenging, but achievable goals this year. What are your thoughts about my goals? Do you set goals for your portfolio by market value or contributed capital? Do you have any suggestions on how to generate $1,000 of Other Income? I look forward to hearing everyone’s feedback and suggestions!
Bert