Now that I have described the key drivers for our financials in 2007, the next step in our financial plan is to clarify our strategic intentions. We consider strategic intentions as the principles as of how we will run our finances and measure our progress by in the next 3-5 years. Correspondingly, we want to articulate quantitatively measurable goals for each of our strategic intentions in 2007.

Strategic Intention #1: Continue to grow net worth at a healthy pace in a risk controlled manner.

We continued to believe net worth, calculated in a conservative way, is the best yardstick of financial success. We do want to keep the momentum of robust net worth growth in the last few years and further advance in our quest for financial independence. At the same time, we are also firm believers of being safely prosperous instead of being really rich, so we do want to avoid huge risks in our journey.

2007 Goal #1: Annual net worth growth of $230,000 (to ~$850,000).

We are likely to close 2006 with a net worth of about $630,000. In other words, we beat our original 2006 goal of $150,000 yearly growth by a mile by adding $230,000 to our bottomline in the last 12 months. However, the stellar 2006 performance is helped by at least $25,000 in employee stock option appreciation, which may not repeat in 2007. And if history is any indication, we know from 2006 that the stock price of a blue chip like Microsoft can be super volatile too.

Therefore, we believe the attainable goal for 2007 is another $230,000 growth in net worth, which represents more than 10% increase in our pre-stock-option "profits". We will consider any extra employee stock option appreciation as bonus. (We arrived at the magic number of $230,000 by some high level math that evaluates our income, expenses and taxes.)

Strategic Intention #2: Achieve solid absolute investment returns despite market conditions.

2006 prove how investment income is growingly important to our financial health. Throughout the year, our portfolio achieved a pre-tax appreciation of appreciated by $77,000 on an average portfolio size of $550,000. Now that we expect our portfolio to swell to over $900,000 by the end of 2007, and over a million in 2008, we will count on steady investment income to provide an even higher percentage of our income.

2007 Goal #2: Achieve average before-tax investment return of 8% in 2007.

We do have modest expectations for 2007: a before-tax return of 8% should be a reasonable target without introducing too much tisk-taking in our portfolio management. Considering an average portfolio size of $800,000 in 2007, we are looking at about $64,000 investment income, and every percentage of extra investment return will mean $8,000 to us. We plan to achieve this through a combination of mutual fund investing and individual stock picking.

Strategic Intention #3: Continue to grow business income and prove the stability of such income.

In the next few years, our income will have three pillars: job income from my highly-paid assignment, investment income from our growing portfolio, and business income from our sideline business. In terms of business income, our annual booking of $70,000 in 2006 covered over 85% of our annual living expenses. As part of our grand plan of financial independence, we do need business income to cover even a larger portion of our expenses, and more, so one day I can pursue other personal interests with a huge safety net.

2007 Goal #3: Receive $80,000 from non-job earned income in 2007.

We expect to grow the profit of our family business by another 15%. This will likely to be achieved through developing more income streams, implementing pricing adjustments, and investing more time to build the fundamentals of the business. We are in a volatile and risky industry, so risk mitigation and diversification are also part of the plan.