2016 Financial Independence Goals

Financial goals.

- Accumulate at least $24K a year. Stretched target - $50K.

Note: I have started looking for a new job back in April. I found it and accepted the job but it will not allow me to maintain the same level of savings, as I used to have last four-three years. I expect average savings rate will be $12 - $18K a year. Family budget will not be affected.  The stretched target will only be true if I start the new job later than currently planned.

- Portfolio should be able to generate $8,000 a year after taxes in the money of the day. The reason for it is my significant stake in the energy companies, which are unlikely to finish restructuring next year to adjust to lower prices.

- Develop additional income source in full, potential reward about $2,000 a year.

- Less than 5% of portfolio in cash by end of the year and $350 K overall net worth in the money of the day.

 Blog:

- Regular monthly updates.

- To cover 6 themes on financial independence.

- Publish easy tracker for the long-term portfolio performance.

 

Educational:

- Create list of books to read - 12 books is minimum.

- Read the books.

- Publish the books reviews.

Family Budget:

- Stay under $100,000 with the family expenses.

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

Be happy.  Run 1,000 miles during the year. Keep BMI below, target 26.6 (current 27.5).

2015 Financial Independence Goals ($295,536 +$22,649 or +8%)

Financial:

- Accumulate at least $48,000 (This is  $40,000 in 2010 money)  or $4,000 a month for investments during 2015, beginning  2016. – Complete. This has been done, $4,000 a month like a clock work.

- Portfolio should be able to generate   $9,000 a year after taxes in the money of the day  (In 2014 it was $7,500). Stretched target – $10,000.  NO. Actual dividends were $6,000 after taxes, which less  to the previous year. Two main reasons:

#1 I am sitting on a pile of cash, not investing them, i.e. not translating them into dividends (~ $100 K).

#2 USD is stronger, so the companies with operations outside US struggling to deliver performance.

Dividends for 2015:

S&P 500 Index fund ~ 740 USD after taxes or 1.7%

Emerging markets fund ~  500 USD after taxes or 3.5%

Rosneft ~ 250 USD after taxes or 3.3%

Gazprom ~ 4,500 USD after taxes or 4%

Average dividends 3% after taxes.

December 2015 update ($295,536 -$7,218 or -2%)

↑ Accumulated $4,000 USD as part of my annual saving goal for December
↑ Received 4 additional Company shares for re-invested dividends ($0.47 USD per share before taxes or 5% annual dividends).
↑ Precious metals went up by $318 USD
↑ EUR appreciated to USD by 4% or $6,725 USD for my portfolio.
Grand total additions:  $11,044 USD

↓Emerging markets lost 6% or $763 USD
↓Vanguard S&P500 lost 2% or $1,049
↓ GazProm shares lost 12% or $12,720
↓ Company shares combined lost $1,264 USD or 8%
↓ Rosneft lost 14% or $1,224 USD
↓ iShares Core Dax lost 5% or $583
↓ GBP lost to USD 2% or $657 for my portfolio
Grand total losses:  US$  18,261

The U.S. Middle Class is Losing Ground

Pew Research Center recently published a very interesting report on what is happening to the middle class in the US.  The report itself freely available online is recommended for reading, however if you do not have time to go through all 74 pages of it, I will share my observations and reaction to it. In 2015, 20% of American adults were in the lowest-income tier, up from 16% in 1971.   

        For the three person household the middle-income range was about $42,000 to $126,000 in 2014 dollars. Lower income households have incomes less than two thirds of the median and upper  income households have incomes that are more than double the median. Under this definition, the middle class made up 50% of the U.S. adult population in 2015, down from 61% in 1971.      In early 2015 120.8 million adults were in middle-income households, compared with 121.3 million in lower and upper-income households combined. Number of adults living in the middle income households has been steadily declining from 1971 to 2015.  As one commentator put it: American dream used to be a to own a house and two cars, new American dream it is to have a job. 

November 2015 update ($302,754 -$4,084 or -1%)

↑ Accumulated $4,000 USD as part of my annual saving goal for September

↑ iShares Core DAX are up by 404 USD

Grand total additions: US$  4,404 USD

↓Emerging markets ETF lost $223 USD

↓Gazprom shares lost $1,325 USD

↓Company shares combined lost $236 USD

↓British pound is lost to USD 3% over one month, for my portfolio it is $2,521 USD

↓EUR lost to USD or $3,721 USD

↓Precious metals lost $462 USD

Grand total losses:  US$  8,488

Financial Independence Family Budget 2007 -2015. 2015 - $92,814 USD

       We have started our family budget, tracking all expenses back in 2007. Initially it was looked at as fairly cumbersome and time consuming exercise.  However, over the period of a few years we educated and trained ourselves to spend 5 minutes a day  in the evening to record all expenses.

       Now with the statistic we could more accurately predict and plan our expenses. It also  helps to clarify some fallacies and incorrect assumptions. For example, as a young parent when you look at nursery cost you think that over the period of time, as your child grows it will be cheaper. Our personal experience clearly tells that it is not happening, nurseries keep rising fees and even at “low inflation” you are lucky if you keep paying the same prize.  However, enough of that, let’s go directly to figures and who we spent $92,814  vs. previous 6 years.

October 2015 update ($306,838 +$19987 or +7%)

↑ Accumulated $4,000 USD as part of my annual saving goal for September

↑ Vanguard Emerging markets is up by $1,545 USD.

↑ Vanguard S&P 500 is up by $4,435 USD

↑ Gazprom shares are up by $13,160 USD

↑ Company shares are up by $1,912 USD

↑ Rosneft shares are up by $1,176 USD

↑ iShares Core DAX are up by 1,209

↑ GBP is up to USD slightly $604 USD

Grand total additions: US$  28,041 USD

↓ Precious metals are down by $614 USD

↓ EUR is continue to fall to USD $7,440

 Grand total losses:  US$  7,219