Starting in 2004, I have always published my annual financial goals at the beginning of each year, and reviewed the result when the year wrapped up. It is a great practice that allows me to keep a record and learn from past experience.
Having spent most of my December to complete my 2008 Financial Plan, I found it might be time to summarize and publicize my financial goals for 2008 in this dedicated post.
Measurement #1: Net Worth Growth
Goal: Net Worth of $1,120,000 by the end of 2008 ($225k annual growth)
Stretch Goal: Net Worth of $1,150,000 by the end of 2008 ($255k annual growth)
Comments: Net worth growth always comes at the top of my annual financial goals and this year will be no different. We are anticipating a challenging year and our net worth improvement in 2008 is likely to be smaller than that of 2007. However, I still want to assign myself a stretch target that exceeds our detailed plan by over 10%.
Measurement #2: Absolute Investment Return
Goal: Annualized Return Rate of 8% in Self-Managed Portfolio
Stretch Goal: Annualized Return Rate of 10% in Self-Managed Portfolio
Comments: 2007 is a volatile year and the common wisdom is 2008 will be even more volatile. Still, I look to manage the portfolio to deliver reasonable absolute return through proper asset allocation and diversification.
Measurement #3: Relative Investment Return
Goal: Beating My Investment Benchmark by at Least 0.5% in 2008
Stretch Goal: Beating My Investment Benchmark by at Least 2.0% in 2008
Comments: Obviously given our asset growth over the years, more of our future wealth accumulation will come from asset appreciation versus more savings from earned income. That's why I feel it is necessary to add the second measurement for my portfolio performance. In 2007 I successfully managed our portfolio to exceed benchmark by 1.79%, and I look forward to another benchmark-beating year.