2013 Financial Goals 7

Vacation Photos 001

I know, I know, I’m a little late to the financial blogger New Year’s Resolution party. But, it’s very valuable to set goals and track progress. So here are my top financial goals for 2013:

 Save 80% of Net Income

I don’t plan on cutting my spending much below my levels from 2012 so I will seek this to bump this figure from last year’s 76% savings by increasing my earnings at work.

Increase Interest Yield & Earnings from Funds in Savings Account

I have kept a sizable chunk of my net worth in a regular old savings account. Formerly, I would have kept much of this in CD’s back in the heydays when CD yield surpassed 6% around six years ago. However, thanks to Bernake and his cronies, there currently aren’t many attractive and secure means to obtain yield.

I’m currently investigating Lending Club which serves as a Peer to Peer Lending site where investors can provide funds directly to consumers seeking loans. Investors can divvy up their investments between Grades A (safer, less return)- F (risky, more potential return) investments. These loans are sliced and diced into increments as low as $25 to limit risk and Lending Club claims yield averaging between 5-13% depending on the risk assumed.

Max 401K & Roth IRA

I nearly accomplished this last year but fell about $500 short on the 401k mainly just an oversight on not bumping my contribution percentage at the end to hit the $17k max. Also, the limits on these were each raised $500 so I will contribute $5,500 to the Roth and $17,500 to 401k to plunk down an extra grand into these tax efficient vehicles.

Shift Larger % of Net Worth to Index Funds from Stock Picks

Currently, I have a sizable chunk of my net worth invested in stocks that I’ve selected. Due to discouragement from my performance, research about the improbability of sustained market outperformance, and lessened interest in spending the requisite time for “stock picking”; I plan to invest future stock funds into index funds. I have all my retirement funds in index funds, so I’m already pretty heavily staked in them.

However, I will maintain my brokerage account and continue to buy/sell individual stocks from that pool of money without making further deposits to satisfy my desire to dabble as an active investor.

When Stock Market Corrects 10% Downward (To Dow Jones Industrial Average 12,500) Invest $10k in Vanguard Index Admiral Shares & Add Weekly Automated Contribution

Corresponding with the previous goal, I’ve been waiting and expecting a good-sized dip to buy into the Vanguard Total Stock market index VTSAX admiral shares which have an absurdly low expense rate of 0.05% annual fees whipping most index funds and destroying conventional mutual funds by being over 20x lower net expenses than the average “actively managed” mutual fund. Beyond the $10k minimum purchase price, I will look to add an automatic weekly contribution of $150-$250 per week.

Keep Minimum 20% of Net Worth Liquid for “Dry Powder”

I realize doing this takes a hit on investment performance by not having all available funds plowed into investments, however, I like having the funds to deploy into action when the market presents buying opportunities.

My beginning investment experience in 2008 has promoted this as I had just begun work and unfortunately didn’t have much capital to deploy as I watched the markets panic and tank from Dow Jones at 14,000 points down to 6,600 in less than a year. The stocks I was able to purchase during this timeframe performed exceedingly well. I keep this rule so I have the funds to double down on juicy opportunities when others are running scared with the “blood on the streets” of Wall Street.

I may even bump this percentage up in the short term as I believe the market is currently overvalued based on historic earnings measurement and the discontent in Washington.

Encourage Friends, Family, & Readers to Embrace Their Finances

Most people spend 40 hours a week, 2,000 hours a year toiling away at work. If people spent even 1 hour a week focused on their finances, it would maximize the efficiency of all those hours spent at work! I want to encourage and empower friends, family, and readers to embrace their finances to get out of and stay out of debt, gain control of their finances and grow their net worth!

7 thoughts on “2013 Financial Goals

  1. Reply Mr. 1500 Feb 28, 2013 12:14 am

    I highly recommend Lending Club. I’ve been on it for just about 2 years and love the results. Check out the excellent lendacademy.com site for tons of great, unbiased information.

  2. Reply Net Worth Snowballa Mar 1, 2013 2:05 am

    Thanks for the advice, Mr. 1500. I just read your posts about Lending Club and it looks like you’ve had some great results thus far. I see that you still have a relatively minor chunk of your net worth invested in P2P lending after a couple years of investing. How much of your portfolio on a percentage basis are you thinking of ramping your P2P lending up to?

    I’m really excited about the prospects of earning sizable interest from my currently uninvested funds. I need to research P2P lending/lending club further, but it’s very intriguing.

    • Reply Mr. 1500 Mar 1, 2013 2:10 am

      Up until recently, its been only an experiment for me. However, I’m now sold on it.

      Right now I have $6,000 split almost equally between Lending Club and Prosper. I want to have at least 10K by the end of the year. Only thing holding me back is keeping cash on hand for purchasing a rental property. At the end of my 1500 days, I want to have 10% of my portfolio in P2P lending. So, 100K if I make it to 1,000,000.

      The amazing thing is the potential for growth. I mention P2P lending to a lot of people and no-one has ever heard of it. Wait until they have a superbowl commercial! Of couse, going big may also ruin it. Let’s hope not.

  3. Reply Headed Home Mar 2, 2013 1:57 pm

    It’s never too late to set goals…and it looks like you’ve set some aggressive ones! I’ve been using Lending Club since November and have had pretty solid results. I’d like to add a bit more to my account, but am practicing patience to get a better flavor for the results. Good luck!

  4. Reply JC @ Passive-Income-Pursuit Mar 2, 2013 5:01 pm

    That 80% savings rate is awesome! I’m aiming to top 80% as well for the year and the first two months have been a great start to that. Best wishes on your goals!

    • Reply Net Worth Snowballa Mar 3, 2013 5:18 am

      Thanks for stopping by!
      Good luck on your 80% goal as well. With that kind of savings rate you’ll have the capital to blow past your $5k passive income goal this year. Your net worth growth the past few years is really impressive!

Leave a Reply