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Sat. Dec. 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
Income
Annualized
Yield
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)


7 Responses to “2010 Investing Goals *”

  1. Steve says:

    Great job! Good luck with your goals.

    What ETF’s and stocks are you invested in? What percentage of each holding makes up your portfolio? Are you leveraged? If so, how much?

    I’m looking into diving into the dividend scene by mixing several dividend ETF funds and holding several individual stocks while I grow my portfolio. While I’m not expecting stellar returns, i’m hoping for a modest dividend income of 30k+ come retirement (achieving a 4% dividend yield).

    Thanks for any information!

  2. Steve: You can see all my holdings here. I am not levered.

    Best Wishes,
    D4L

  3. Monevator says:

    The last 18 months have been very unusual for excessive dividend cuts, as you say. Normally I’d think setting income goals for specific years is far safer than setting portfolio value goals, but it’s turned out just as risky this time!

    I should know this, but have you accounted for moving more towards bonds in 2027 as you approach retirement? (I’m sure you have – or are you going for the 100% stocks approach?)

  4. Monevator: My allocation to bonds is increasing 1% per year it went from 27% in 2009 to 28% in 2010.

    Best Wishes,
    D4L

  5. D4L,

    So are you simply going to increase your fixed income allocation throughout your lifetime by 1%? What if you live another 50 years? Or do you have a top percentage for fixed income allocation?

  6. DGI: It is my plan now to increase my fixed income allocation 1% per year until I retire, then I will re-evaluate.

    Best Wishes,
    D4L

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