Saturday, December 26, 2009

* 2010 Investing Goals

My goals were originally defined in this December 1, 2007 Investing Goals post and last updated in my 2009 Investing Goals. As noted all year, I will fall short of my 2009 goal of $8,000 in annualized income. Looking at my long-rang goals, I am still on track to reach my 2017 goal of $30,000. The 2027 goal of $110,000 is not as clear. Given the increased prices and lower yields of new investments, my model is currently indicating this could be difficult to make. However, I will leave both 2017 and 2027 unchanged. Now, what to do with my 2010 goal?

The financial environment we are operating in continues to add complexity to setting a definitive 2010 investment goal. It seems we have quickly moved from dividend cuts to "irrational exuberance". After divesting my income portfolio of unproductive stocks and ETFs, it is much stronger than it was a year ago. Throughout 2009, I have lowered the portfolios risk and increased the quality of its holdings.

Looking to 2010, I anticipate it will be better than 2009. That's not to say the market won't have a rough ride. I fully expect (and welcome) a correction. However, I don't foresee the same level of dividend cuts we had to endure over the last 12-18 months. A correction in the market will provide opportunities to pick up world class stocks at lower prices. With that as a backdrop here are my updated goals going into 2010:
Description Dividend
on Cost
2027 Goal 110,000 20.00%
2017 Goal 30,000 10.00%
2010 Goal 9,500 4.90%
As noted above, the 2027 and 2017 goals are unchanged. In setting the 2010 annualized dividend income at $9,500, I resisted the temptation to stretch it to $10,000. To achieve the $9,500 of annualized dividend income, the overall rate of growth will be have to be better than what was experienced in 2009. The 2009 yield on cost of 4.90% assumes significantly lower dividend cuts than was experienced in 2009 and 2008.

I am confident that I will finish the year with higher annualized dividend income than where 2009 ended. In addition, I feel good that my string of sequential months of higher annualized dividend income will continue through 2010.

If it were easy, everyone would do it and success wouldn't be nearly as satisfying. Here's to an exciting 2010!

(Photo: sanja gjenero)