Contributed by mm | January 6, 2004 08:50 PM
PST
I'm publishing my year 2004 financial objectives as follows.
|
Measurement Name/Definition |
2003
Baseline |
2004
Goal |
2004
Stretch Goal |
|
1. Net Worth |
$132,584 |
$174,000
|
$180,000 |
|
Combined value of all assets minus all liabilities. |
|
|
|
|
2. Total Return on Investable Cash (TRIC) |
9.27% |
10.00% |
12.00% |
|
Annualized total return on average balance of saving, brokerage, Roth
IRA and 401(k) accounts, minus $5,000 for day-to-day liquidity. |
|
|
|
|
3. Relative ARR |
-4.7 pts |
+3 pts |
+6 pts |
|
Annualized return on Datek, Ameritrade and Roth IRA accounts minus S&P
500 % change during the same period. |
|
|
|
|
4. Absolute ARR |
21.1% |
10.0% |
12.0% |
|
Annualized return on Datek, Ameritrade and Roth IRA accounts. |
|
|
|
|
5. Expense Saving % |
-3.4% |
2.0% |
5.0% |
|
Living expenses as % of the budget of $59,000. |
|
|
|
|
6. CFI Saving $ |
$752 |
$800 |
$1,000 |
|
Quantified saving on top of 2003 spending level from cost cutting
initiatives. |
|
|
|
This set of objectives is a fine-tuning of my 2003 objectives. Through the analysis of the 2003 execution, I believe most of the 2003 objectives are good indicators of my personal finance progress while I introduced a new metric TRIC to complement the set. Here are some additional comments regarding each of the 2004 objectives:
1. Net Worth
I have finished my 2004 annual budget. (As it includes lots of sensitive information, I don't plan to share it publicly in this blog.) The budget predicts an annual net worth increase of around $41,500 based on some high-level assumptions:
- My wife will spend more time with the family and will not work for the year.
- Reasonable salary increase, bonus, normal ESPP gain, 5% 401(k) gain, 10% investment gain and 1.7% property appreciation.
- Around 5.8% living expense increase to pick up additional housing expenses and enjoy a slightly better lifestyle.
- Normal tax consequences.
I logged $53,618 net worth increase in 2003, and the decelerated net worth growth is mainly attributable to the assumption that my wife will be a full-time homemaker and the effect of certain one-time 2003 income (like SOTP and surprising tax return for year 2002).
My 2004 net worth goal reflects the result of the budget and my stretch goal asks for $6,000 markup.
2. Total Return on Investable Cash (TRIC)
This is the only new objective I introduced this year. As discussed in a prior post, the main reason for setting up this new goal is to get a holistic reading of my capital allocation performance.
3. Relative ARR
4. Absolute ARR
I will continue to use these two metrics to measure my performance in actively managed account. While I will stay defensive for the foreseeable future, my goal for any invested money is still at least 10% annual return. I feel my current portfolio is well positioned to deliver that number.
5. Expense Saving %
My 2004 budget includes an annual living expense of $59,000 and I will measure my expense control based on this number. A 2.0% saving will translate to $1,180 into the bottomline.
6. CFI Saving $
A different flavor of saving measurement, CFI (Continuous Fiscal Improvements) is defined as initiatives to bring down living expenses or bring in more income. After a total saving of $752 in 2003, I target to deliver a slightly better 2004.
What do you think of this post? Be the first to share your
opinions.
Monthly Review - February 2004 ($139,905, +$3,653) (March 04, 2004)
SUMMARY With a net worth increase of $3,653, February 2004 brought another month of solid progress toward my 2004 objectives. The 3.0% net worth growth is attributable almost equally to regular saving from job income and a new batch of vested stock options. The Month-To-Retirement ... Read
Monthly Review - January 2004 ($136,252, +$3,668) (February 01, 2004)
SUMMARY January 2004 is an uneventful month in my journey to early retirement. With largely flat performance in investment accounts and regular saving, my net worth advanced $3,668 to end up the month at $136,252 (an increase of 2.8%). Liquidation value surpassed $110,000 by the ... Read
Results of Year 2003 Financial Objectives (January 04, 2004)
At the start of Year 2003, I wrote down six financial objectives for 2003. To conclude this first full year of my financial journey toward early retirement, here I'm reporting my results vs the objectives. Read
Monthly Review - December 2003 ($132,584, +$8,123) (January 04, 2004)
SUMMARY December is a great month for my net worth. First, the conclusion of the Microsoft SOTP provided a pleasant year-end bonus. Second, the slow recovery of OCA stock helped to put a good close to my portfolio for the year 2003. Adding my monthly ... Read
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