2016 Financial Independence Goals ($387,831 +$92,295 or +31%)

Financial goals.

- Accumulate at least $24K a year. Stretched target - $50K.  – Partially complete. Accumulated approximately $ 38K.

- Portfolio should be able to generate $8,000 a year after taxes in the money of the day.  – Complete.  Without seeing end of the year result from some of the companies received $8 K after taxes.

- Develop additional income source in full, potential reward about $2,000 a year – Not achieved, although some measurable progress made.

- Less than 5% of portfolio in cash by end of the year and $350 K overall net worth in the money of the day – Partially achieved, portfolio $387 K but approximately 11% in cash.

 Blog:

- Regular monthly updates – Not achieved. (Missed September update).

- To cover 6 themes on financial independence -  Portfolio performance, Assets Allocation,  Energy stocks screening and Family budget. Missing one more theme.

- Publish easy tracker for the long-term portfolio performance – Not achieved.

 

Educational:

- Create list of books to read - 12 books are minimum. Not achieved. Read only two, not achieved.

- Read the books.

- Publish the books reviews – Not achieved.

 

Family Budget:

- Stay under $100,000 with the family expenses – Achieved. Spent $84K.

- Accumulate $7,000 towards durable goods replacement over 10 years – Achieved.

Be happy.  Run 1,000 miles during the year. Keep BMI below, target 26.6 (current 27.5)- Partially complete. Ran 1,022 miles but BMI is 27.4.

Real life portfolio performance 2016 and retrospective

Value	Performance indicator		Comments
Absolute return	$, K	%	This is without taking into account accumulated $ 38 K
	+54	20
Relative return	S&P 500, %	Portfolio, %	Emerging markets (mainly Russia) rebond and energy sector.
	8.5	+20%
Cash accumulated in 2010 money	Planned $, K	Actual $, K	Minimum target was $24K, stretched $50K. Partial completion.
	50	38
Personal plan in 2010 money	Planned $, K 350	Actual $, K 244

I have been on target this year, achieving $387 K or $310 K in 2010 money (this includes cash, all numbers in USD):

Year	2008	2010	2011	2012	2013	2014	2015	2016	2017
Money of the day actual	153,400	119,800	165,600	226,800	298,400	288,608	295,536	387,831
Target						370,000		350,000	407,000
Inflation %		2	3.5	3	4	4	3	4	4
Cumulative inflation		1.02	1.06	1.09	1.13	1.18	1.21	1.26	1.31
2010 money	153,400	117,451	156,967	209,032	265,244	244,583	244,244	307,000	310,000

  In other words, if in 2010 you would have $ 10,000 and keep it, it worth $7,930 today.

Performance of my investments over the last 5 years (all in €):

	2012	2013	2014	2015	2016
Money of the day invested – cumulative	44,460	173,770	189,638	202,593	293,842
Shares value -	44,886	180,827	163,000	155,745	317,163
Inflation adjusted U.S.	45,794	182,108	205,895	225,416	309.839
Inflation adjusted U.K.	45,883	182,202	205,993	227,706	314,475
S&P 500	48,639	217,099	262,768	277,947	383,122
Free cash	94,500	23,454	53,087	92,386	43,000
Dividends received (EUR)			5,719	5,321	8.960
If invested in S&P 500			4,730	5,559	7,279

Real life dividends return in 2016 on various investments (all in €):

	Cost year end 2016	Dividends in 2016	Return, %
Vanguard Emerging markets	13,380	310	2.3
Vanguard S&P 500	61,650	998	1.6
Gazprom OAO*	126,900	4,566	3.6
Rosneft*	12,810	298	2.3
iShares EM RMK SOUV BD	20,743	1,101	5.3
iShares EM RMK CORP BD	37,410	1687	4.5

Note: Both Gazprom & Rosneft dividends are already tax deducted.  The companies although benefited from Trump effect and expectation that next year will increase share of net profits directed to dividends (currently ~27%, expected to go up to 50%). If we discount this three factors Gazprom return is 4.8% and Rosneft 3.2%.

Financial independence portfolio performance over last 5 years:

 

What does my financial independence portfolio performance tell me?

-          If you are aiming for a longer term towards retirement, growth type of a portfolio – you better stick with S&P500 index. Yes, I beat it in 2016 but still way off over the course of 5 years. Dividends wise I received 3% vs. 1,8% from S&p500.

-          My portfolio still overweight with cash (roughly ~15%), with emergency money.

-          I need to stay away from EU indexes and funds – nominally they are raising, but as the West European currencies fall net results is zero or negative. British FTSE 100 went up by 14.2% in 2016 , while GBP lost 17% to USD. Net result? -2.8%.  German DAX went up by 6% in 2016 (including dividends reinvestment), but EUR lost 5% to USD in the same period.

In overall the year was fair – I achieved my short term financial goals (savings, performance, expenses) but not making progress on the long term – reading books, reducing weight and making additional income streams. This is even more important now, when my ability to do savings from reduced salary is not there.