My Net Worth Update for 2009 and Goals for 2010

Back in 2005 I calculated that my net worth would reach $1 million by the end of 2012 if I could manage a steady 20% yearly increase. I have been tracking my progress ever since. In 2009 which was year 4, my net worth increased by 32.9% or $116,800. That is unfortunately not enough to make up for the major setback that was 2008.

	Target	Actual
Dec-06	$328,800	$299,100	Missed by $29,700
Dec-07	$395,800	$377,100	Missed by $18,700
Dec-08	$476,400	$355,400	Missed by $121,000
Dec-09	$573,400	$472,200	Missed by $101,200
Dec-10	$690,200
Dec-11	$830,800
Dec-12	$1,000,000

In 2009 I was able to max out my 401k and my IRA contributions. I also contributed $3,000 to a 529 plan. Where I failed to execute was on the trading side. I remained too cautious after the stock market bottom was in, siding with the “non-believers” that the rally was for real.

My goals for 2010 are:
-max out 401k and IRA contributions
-contribute $5,000 to the 529 plan
-grow my investment portfolio by pursuing trading and investing opportunities in order to get as close as a $690,200 net worth as possible

On the real estate side, I will keep an eye open for any good opportunity to invest. But not before the $8,000 incentive for first-time home buyer has expired. Once the incentive will be gone, the housing prices are likely to correct further.

My Net Worth Update for 2008 and Goals for 2009

My net worth shrank in 2008 by -5.7%. My steady income and savings efforts were not enough to offset major losses in my investment accounts.

On the plus side I was able to sell my condo in August for a break even financial operation. Given the state of the real estate market, I am considering myself lucky.

I am now standing way off my goal of reaching $1M net worth by age 40.

	Target	Actual
Dec-06	$328,800	$299,100	Missed by $29,700
Dec-07	$395,800	$377,100	Missed by $18,700
Dec-08	$476,400	$355,400	Missed by $121,000
Dec-09	$573,400
Dec-10	$690,200
Dec-11	$830,800
Dec-12	$1,000,000

With only 4 years left, this goal is not looking so good. But who knows? The stock market could rebound nicely before 2012, right?

I'd also like to keep an eye open for a good real estate opportunity, i.e. a single family home in a desirable neighborhood at a discounted price. But there is no urgency as housing prices keep on falling. The bottom is not in place yet.

So here are my goals for 2009:
-max out 401k and IRA contributions
-contribute $5,000 to the 529 plan
-grow my investment portfolio by pursuing trading and investing opportunities in order to get as close as a $573,400 net worth as possible

My Net Worth Update for 2007 and Goals for 2008

Back in December 2005, I gave myself the goal of increasing my net worth to $1M in 7 years. I figured I needed a 20.4% yearly increase of my net worth over the next 7 years to reach that goal. Now that 2 years have gone by, it is time for a little update.

In 2006, my net worth increased only 9.5%, leaving me short of my December 2006 goal by $29,700. That was not the best way to start.

In 2007, my net worth has increased a whopping 26% ($78,000). It means that I am catching up, but I am still short of my initial December 2007 goal by $18,700. Most of the increase came from a higher savings rate thanks to a substantial pay raise. I also managed a decent but not extraordinary 10.4% return (including dividends) on my investments.

My net worth in December 2005 was $273,200. My year-end net worth goals are:

	Goal	Actual
Dec-06	$328,800	$299,100	Missed by $29,700
Dec-07	$395,800	$377,100	Missed by $18,700
Dec-08	$476,400
Dec-09	$573,400
Dec-10	$690,200
Dec-11	$830,800
Dec-12	$1,000,000

I feel that tracking my progress towards my goal is helping me tremendously. I have become more focused, especially in regards to managing my stock market investments.

The goal for 2008 is a net worth of $476,400 by December 31^st. That is another 26% ($99,300) increase from where I am now. I find it difficult to be very optimistic about 2008 outlook. I will have to rely more on stock market returns and less on straight income to grow my net worth. There is currently a lot of fear and indecision regarding where the economy is heading. I guess it is one more reason to be cautious and stay focused.

To a fun and prosperous 2008 !

Goal Trackers

The “My Goals” section on this blog show my progress toward my net worth goals. Thanks to Clutter2Cash for the code.

I started tracking my net worth on a spreadsheet in 2006. I gave myself an arbitrary goal of reaching a $1M net worth by age 40. Hence the year 2012. A little bit too optimistic you think? Time will tell.

Assuming a consistent linear increase of my net worth, I will need a yearly growth of 20.4%. Here is the breakdown :

Starting net worth on Jan 1, 2006: $273,200
Target for Dec 31, 2006: $328,800 - Missed by $29,700 (9%)
Target for Dec 31, 2007: $395,800
Target for Dec 31, 2008: $476,400
Target for Dec 31, 2009: $573,400
Target for Dec 31, 2010: $690,200
Target for Dec 31, 2011: $830,800
Target for Dec 31, 2012: $1,000,000

In 2006 I fell short of my goal by 9%, mostly due to some investing mistakes that I would call “tuition”. I have learned from my mistakes and my investments are doing a lot better this year. As of October, I am just 3% shy of the goal for 2007. With 2 months left in the year, and with a little help from Mr Stock Market, there is a chance I can get there.

Obviously this rate of growth is not really sustainable. As I get closer and closer to 2012, it will get more and more difficult to grow my net worth by 20%. Even if my stock portfolio manages to grow by that much, the value of my house will definitely not, and neither will my savings capabilities. But at least it is something to go by.

First Post

I have been reading financial blogs for a couple of years now. I have learnt a lot from them and from other readers commenting on them. One thing especially I came to realize is that I have not been growing my wealth as much as I could have in the past 10 years as an income earner.

By starting my own blog which I intend to use as diary of everything financial in my life, I am hoping to gain some focus on growing my wealth. I hope it will help me keep track of my progress towards my financial goals, and help me make better financial decisions.

My long-term financial goal is to accumulate sufficient wealth so that I can have the luxury of retiring early if I wish to do so. How early? 55 years old would be nice. That gives me 20 years. Let's start now!