2014 Financial Goals

New year new goals.  I have slacking off on posting lately, work has been extremely busy and frankly I just got out of the habit of writing.  With the new year, I thought I would try to get back into the swing of things.  Here’re my financial goals for this year.  I have broken the post into four major categories.  The categories has changed a bit since my 2013 review.

  • Real estate – deal with all things related to real estate (primary residence or investment)
  • Major purchase – big ticket items
  • investment – stocks, mutual funds, stock options, restricted stock units etc.
  • Financial Protection – life insurance, living trust

The big picture

moneyBefore I get into the specific goals, let me talk about what’s my ultimate objective.  Ultimately for me, it’s going to sound like a cliche, it’s about having the financial freedom.  For me, the goal I like to achieve is that in 4 years, I want to be in a state that I have to work to maintain our current lifestyle.  By then, my kids will be older and I like to be more involved in their schools and daily lives.  I like to reach a point where I don’t have to work.  Knowing me, I will probably continue to work, at least in some part time capacity.  However, knowing that I don’t have a work would make all the difference.

I. Real Estate

Monitor residential investment property

rental propertyTowards the end of last year, I’ve narrowed my focus to two areas.  For area I, I’ve kicked this off in the new year by interviewing several real state agents.  One of them is looking promising, too early to judge at this point.  Let’s see how she turns out.    For area II, I have some more work to do.

My criteria is simple, the rule of thumb I use is that annual gross rent / (purchase price + repair to bring it up to rental condition) >= 10%.  Taking into account the property tax, HOA, vacancy etc, I’m looking for a cash on cash return of 7-8% annually.  With leverage (i.e. loan), the return will be a little bit higher.  I do look for areas that has good upside potential (i.e. property likely to rise in the coming years). however, that’s very speculative and I don’t factor it into my calculation.

Research commercial investment property

I don’t know much about commercial real estate, need to do some research and learning.

II. Major Purchases

major purchaseTo my own dismay, I can’t really think of any big ticket item we need to purchase.  I define the big ticket item as greater than $3000.  We made a lot of major purchases last year, and for now, I can’t of anything, though I doubt I will stay true to it.

III. Investment (stocks, mutual funds etc.)

With the stock market returning a whopping 30% last year, I do expect the market to revert to its means and pull back in the coming years.  As such, I like to 1) Rebalance portfolio to take a more conservative allocation 2) Monitor the market daily and be ready to liquidate as needed.

Rebalance portfolio

rebalance stock portfolioAs of now, I have most of my liquid asset sitting in stock, definitely too high of a concentration.  I plan to buy 10-20% bond to achieve a more balanced portfolio.  I also hold too many different mutual funds, many of them overlapping, I need to do some rationalization there.

Better cash management

I don’t have much cash reserve right now and need to set aside a rainy day fund.  Looking at the pathetic interest rate that is offered by the banks right now, I will use CapitalOne 360 (formally ING Direct) for cash.  It has consistently offered rate on the high end, right now at 0.75%.  I have been using them for a number of years, very easy to use.

Regular monitoring of stock market

iPhone stocks appsWhile the gains take many years to build up, market correction can wipe out many years of gain in just a few month.  I looked at my investment history over the past 15+ years, the 2000 an 2008 correction pretty much wipe all gains in the preceding year.  The easiest way I found to monitor is through my iPhone, I mostly monitor the stock market index and a few selected stock I hold.  Each day, I spent two minutes looking at it and the related news.  I just use the very simple Stocks app that comes with iPhone.   I just added Yahoo finance and Bloomberg, so far they are both kind of an overkill for what I need.

Invest in 529 plan for kids

utah529I signed up for a 529 account when my son was born and put side some money for him, but haven’t done that for my daughter.  I use Utah Education Savings Plan,  the return has been very good (actually better than my own stock portfolio) and I don’t have to do anything.

IV. Financial Protection

Setup Living Trust 

I really haven’t done anything on this front, so resetting as a goal for this year.  With young children and some nest egg, I put living trust on the agenda earlier in 2013.  I have made some progress

  • Gathered a list of recommended attorneys from friends and colleagues
  • Enrolled in the ARAG through work to have part of the cost covered
  • In the next months or two, I plan to meet with a couple of the recommended lawyers and get this wrapped up.

Closing thoughts

That’s quite a list.  I’ll report back regularly on the progress or the lack of progress I make.  Reader, what’s are your financial goals for 2014?


4 thoughts on “2014 Financial Goals

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