2008 Financial Goals

My financial goals for 2008 are relatively straight forward. I have set myself the revised objective of retiring in 2012/2013 when I will be about 47 years of age. To achieve this I need to do three things:

1. maintain my current well paid employment. While I am quietly confident that I will continue my current position, I do not take this for granted and must devote the very long hours my job requires;

2. maintain a savings rate of about 55% of pre-tax income. I achieved a savings rate of 57% in 2007. I expect my savings rate to fall in 2008 due to (i) higher expenses in some categories (primarily utilities, school fees and holiday costs) partially offset by cutting back on some of the discretionary spending (wine, art) and (ii) my income fluctuates a bit from month to month and I have budgeted for a slight contraction in earnings in 2008;

3. achieve a net return on my investments of at least 6.7% per annum. At first sight a return of 6.7% seems easy and it should be. However, there are a number of assets that will return less than this (bank deposits) which means the remaining assets have to do better. In order to produce higher returns it will be necessary to take on higher risk. Given that I have the option of deferring retirement, I can accept the risk of chasing higher returns to achieve my objective.

A secondary set of objectives can be summarised as time management. Specifically, I want to spend less time administering my investments (property investment is not nearly as passive as I would like it to be) which will allow me to spend more time on other things (such as family, work, exercise and researching investments). Even a couple of hours a month would be a big plus. Some specifics:

1. put as many of my own bills as possible on auto pay;

2. get an many income sources as possible on auto pay. I have done this with all but one of my tenants and it has saved me time as well as improving my cash management;

3. process the payments which are not on auto pay and do the filing less frequently. I will try once every two weeks and see how that works out.