Goals for 2022

I realize that we’re one-third of the way through 2022, but it’s time to sit down and write some end-of-year goals.

I’ll also list my 3-year and 5-year goals for my portfolio.

How should I think about my investment goals?

One thing I have struggled with, over my life really, is having investment goals.

There are times it was pretty easy. “Pay off my credit card debt.” Great, that’s a goal. Every extra dollar went towards that. Debt was paid off. Success! And the next goal, “pay off my mortgage.” Again, a solid goal. Took a while to achieve. Debt was paid off. Success!

Once you’re debt-free, the next target is a bit elusive.

Most “purchase” goals are quite easy to achieve once you’re debt-free. A vacation? A new car? A fancy watch? None of those require much time or effort to save for. After working so hard to get out of debt, spending money frivolously seems like such a waste.

I have no interest in a $100,000 watch or a second house. Those are spending goals.

Investment goals are harder to define. From this point forward, the extra money I make just sits in my bank account with no predefined destination or purpose.

Yes, I could come up with an arbitrary number. Save $1 million! Save $5 million! For some reason, I don’t get much joy out of that concept.

SMART Goals: Specific, Measureable, Achievable, Relevant, Time-Bound.

For now, I think my goal should be to be efficient with the money I have.

Goal #1: Being Fully and Efficiently Invested

One challenge that I’ve had after paying off my mortgage, is that when money comes into my account it just sits there. My checking account grows and grows until I get an idea about where to put some of it. I might also change my mind about where my money is sitting and decide to sell an investment. I’m never fully invested.

And it might be easy to just push that money into a Money Market mutual fund, to claim the title of fully invested. But that shouldn’t count, because I’m not going to gain a high return from that money.

As a result, I’ve largely been too conservative during the “greatest bull run in the history of the stock market!” At any time, 30% of my money was sitting in cash. Some of it was nicely invested in stock index ETFs, individual stocks, etc. And I did pay a fair decent amount of taxes on investment gains, so it wasn’t a complete waste. But it could be better. It should be better.

So my goal is to find the ideal balance between the stock market and safe investments. Reallocate my cash according to that balance. And to invest my income each month according to a predefined investment plan.

SMART Goal: Not have a significant amount of money in savings accounts that is not invested as per my investment plan, in order to increase my rate of return. This should be achievable within 3 months. And continue indefinitely.

Goal #2: To Make From Investments What I Make From My Business

I said above that numeric “$X in the bank” goals don’t interest me. But here’s one goal that might.

What if my investments consistently made me as much as my business does?

That would be quite a thing! I don’t know what is required to get there. It’s a massive goal, though. Not going to be easy and could take years to pull off.

Not that I plan to retire. But at some point, I might ask “what’s the point of working if I am making as much from not working!”

And investments compound on themselves. It’s not just the straight-line accumulation of cash but watching the thing grow on its own…

OK, that’s settled. I want to make as much from my investments as I do from my business. That’s currently a big goal.

SMART Goal: I want to make $X per year from my investments (interest, dividends + unrealized capital gains), which is currently equivalent to what my business nets after expenses and before taxes. I will need to put a plan together to see how long this will take based on some reasonable assumptions. But I will try to do this within 7 years.

Goal #3: Rate of Return Across My Portfolio

This is a late addition to this post.

I should probably aim for a certain real return on investment.

Nothing too crazy. Not going to aim for 25% ROI or something. But could I do 8%? I’m going to have to do some research here. Subject for some future posts, no doubt.

Inflation is currently running hot, and we don’t know when it will come back down. But I should aim to beat inflation at a minimum. I’m going to say, aim for an 8% return over the 5 years.

SMART Goal: I want a realistic average 8% annual return of investment across my entire portfolio.

End-of-Year 2022 Goals

I started this post talking about end-of-year goals, plus 3-year and 5-year goals. I kinda wandered off and talked about life goals.

I should regularly invest my business profits as a habit by the end of the year. I should have a long-term plan and measure myself against that plan. I should be 10% on the way to achieving my long-term goal.

I say 10% because I expect a rocky investment environment all around. The stock market has been volatile, interest rates are slowly rising, and people are talking about a recession. But I’ll put that number of 10% out there.

Within 3 years, I should achieve 33% of my long-term investment income goal.

And within 5 years, I should achieve 75% of my long-term investment income goal.

Do or Do Not; There is No Try

I’m glad I wrote about this. It forced me to think and come to a conclusion.