One benefit of blogging is that you keep a written record of your life so you can always rewind to re-learn yourself. One year ago, when I plan for our financial life in 2007, I made 9 predictions. Now that the year is almost over, how is my batting average? We are going to review them one by one in this three-part series:
First on my forecast on earned income:
Prediction #1. Job Income from my daily job will be steadily growing at an annual pace of 8-10%.
What I Said One Year Ago: I have full confidence I will continue to perform at the top of the pack in my company, and expect 1-2 raises throughout the year. I also count on more employee stock option and stock award income. On the balance, some of my expatriate benefits will not grow as fast.
Result: Excluding stock option income, job income increased 15%, although 6% gain is attributed to stronger Chinese Yuan vs. US Dollar. Barring the foreign exchange gains, the real gain is about 9%. Bingo!
Prediction #2. Employee stock option appreciation will be a wild card as MSFT is priced for perfection at $30.
What I Said One Year Ago: I have been seeking an exit strategy for my employee stock option inventory since November. While we did finally launch Windows Vista and Office 2007, there seems to be no catalysts that will drive the stock price higher from this point. $30, or 15x current earnings, sounds like too high to me for a company this big.
Result: The wild card ended up as a great card. I was wrong in saying MSFT was fully valued at $30. MSFT's appreciation from $30 to $37 at one point of time in October delivered over $70,000 in net worth gains, although some of that was given back in November. Also, I did exercise 1/3 of my stock option at the top at $36.60. Not a good call on MSFT valuation.
Prediction #3. Our family business income can continue to grow at an annual pace of 10-15% with time investment and smart monetization.
What I Said One Year Ago: We are very surprised that the gross income from our business grew from $39,000 in 2005 to over $70,000 in 2006 with minimal care. Still, we do see some opportunities to grow the top line -- as a starter, we completed our first price hike in about a year in early December and so far customers have been very receptive.
Result: Our flagship business Perfect Future Publishing Co. experienced phenomenal growth in the 1st half of 2007 but faced some headwinds in the 2nd half. Overall, it is likely to end 2007 with an annual revenue growth of 14%. Our new business Expat Service Co. grew over 350% thanks to expansion of product lines and customer base. Overall, our family business income achieved over 20% year-over-year growth! It appears we were conservative in evaluating our 2007 opportunities.
To be continued on debrief of other 6 predictions ...