Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind.
Seneca
New Years Resolutions were never really my thing, but for about ten years, I have kept track of my net worth and portfolio. Twice a year, with only a few gaps over the past decade, I tended spend an afternoon in front of my laptop, with an Excel file, working out what has happened over the past six months.
Truth is, I don’t know what made me choose this approach, especially as I also have long updated my net worth and account balances on a weekly basis. It’s perhaps a sign that I have some repressed accountant genes or something. Somewhere (it might have been William Bernstein’s Four Pillars of Investment) I had picked up the idea that what I needed was plan, or an investment policy, and a system of regularly reporting and analysing the results.
Ten years later, this process has evolved a lot. The excel spreadsheet is a spidery tribute to growing complexity, trial and error experimentation, and a healthy interest in quantification of all kinds of different numbers and ratios. For a long time, for example, I enjoyed tracking the number of weeks I could afford to live with my current expenses, with no income. A kind of early financial independence impulse, I guess.
Yet in many essential features, while the plan has evolved, the process still involves the same steps:
- working out how to manage my savings and portfolio
- deciding an asset allocation between alternatives such as shares, bonds and other asset types
- setting a goal for my portfolio – usually comfortably in the distance, with years beginning in the 2020’s
- taking all of the above and turning it into steps and actions for the six and twelve months ahead
My main goals for 2017 are:
- Continue to invest in low-cost passive index approaches (mostly…see goal 5)
- Contribute $75 000 to my existing portfolio regularly using dollar cost averaging
- Achieve total interest and distributions of $28 000
- Maintain an emergency fund of around 12 months of expenses
- Keep on experimenting at the edges of finance technology and new products – particularly with passive index-based Exchange Traded Funds
Going for a post New Years Eve bike ride today, I listened to one of my favourite podcasts at the moment – the Mad Fientist. He was interviewed Fiery Millennials and Millennial Boss, and both emphasised the role of making goals public to foster accountability. I aim to give regular updates on progress towards these goals.
So I have set my sails, and leave harbour!
