(Note on 11/15/19 – This page needs a full rewrite. I became a full-time trader/investor about seven years ago (on target for my earlier goal listed below) and haven’t looked back at this page since then I guess. I also got divorced a couple years ago and that changed my personal finances and risk tolerance greatly. I target closer to a 10% annual gain now and hopefully with less risk than the general market.)
(Note on 1/16/10 – I published this page on May 18, 2007. I haven’t updated it since then, mainly to see when I catch up to my original plan. Clearly a lot has changed since the first half of 2007, but I’m still setting new goals each year and doing my best to reach them.)
The short version = I want to become a full time investor by the end of 2013, when I’m 41 years old.
Financial Goals
My main goal is to not be dependent on having to work for “the man”. I break my goals down in different ways that all revolve around how much I want to make. Wanting and needing are different. I only need about $2000 per month in after tax income to get by since my wife works (she makes more than I do, not counting our investments I manage) and we could probably even reduce our expenses to get by on less. What I want is to not just get by, but to thrive and make it so my wife doesn’t have to work if she doesn’t want to. The first step in my overall goal is to try to create a solid third income.
Meeting my needs:
To cover my needs, I need $2000 per month after tax which is approximately $2,650 after write offs. To make $2,650 in a month I need ~$80,000 if I could maintain my recent 40% returns. That’s not realistic so in reality I need more than $160,000 if my gains are closer to 20% annually. That’s still a high target and will be tougher to maintain in a bear market. I’ll keep using that 20% number until I stop making those returns on a fairly regular basis.
Meeting my wants:
For me, a solid income is at least $100,000 per year pre-tax. This number keeps growing so my plan has to have growth of the principle. $8,334 per month equals $100,008 per year. To make $8,334 per month I need $500,000 to work with if I can produce 20% returns. I expect that by the time we’ve saved $500,000 our wants will be greater.
Unrealistic Dreams:
In a good year I can make 30-40% returns. Deep down I know that’s not sustainable over time, but I like to dream that if I could do that year in and year out I could invest for a living. If I could maintain a 40% return, I only need $80,000 to get by as long as my wife keeps working. To be comfortable the way we want to be, we need $250,000 minimum.
Somewhat Realistic Plans:
We’ve been saving $1500 per month up until recently when we paid off medical bills from my surgery and a no interest payment plan for a new computer. Now we are starting to save $2,000 per month and can throw in more when we receive a bonus from work. At a minimum I plan to contribute $25,000 per year towards our taxable investment account. I plan to make 20% returns most years and understand that I’m likely to have a down year again sometime. I actually have no delusions of retiring before I’m in my 50s. I want to have the security of knowing that if I lose my job I still have income.
This is a simplified view of my planned growth starting with my birthday in July 2007. This simplification does not take into account the fact that I make contributions monthly and that money is compounded throughout the year and taxes are rough estimates. I also plan to stay employed and continue to increase my income and contributions.
|
Age |
Yearly Contribution |
Growth & Profit Minus Taxes |
Balance |
|
36 |
|
|
$57,000 |
|
37 |
$25,000 |
$11,400 |
$92,260 |
|
38 |
$25,000 |
$14,761 |
$132,021 |
|
39 |
$25,000 |
$21,124 |
$178,145 |
|
40 |
$25,000 |
$28,503 |
$231,648 |
|
41 |
$25,000 |
$32,431 |
$289,079 |
|
42 |
$25,000 |
$40,471 |
$354,550 |
|
43 |
$25,000 |
$49,637 |
$429,187 |
|
44 |
$25,000 |
$60,086 |
$514,273 |
More realistic is a return closer to what the indexes average, but I’ll readjust my plans if my returns are less than I am planning for.
Blog Goals
I started this blog after reading an article in Smart Money about the money that can be made blogging. I read that article while recovering from surgery and was pretty high on oxycodone and hydrocodone. Everything sounded so easy, post a few pages and get rich. I was already keeping my trader’s journal in Word, so I just moved it to a blog and kept going. As I started weaning myself from the narcotics I realized making money from blogging isn’t such an easy task. I’m sticking with it because I’m enjoying meeting people and exchanging ideas. I welcome your comments on any posts and emails directly to me (alex AT mytradersjournal DOT com). I’ll keep posting articles even if I don’t get a large following, but would like to find a steady group of readers who likes to share ideas and if I get some ad revenue that’s a bonus.