2019 - The Plan This Year

If you haven’t checked out my review of 2018, I highly suggest it so that you can see where I went wrong and didn’t quite meet the gains/goals that I wanted as the market dipped. This post is going to be a bit different, looking forward into the New Year and setting new goals that will guide me.

THE GOALS

The first thing to do is make new goals and then make the plans that will lead me to complete them. After much thought my 2019 goals are as follows:

  1. Contribute $12,000 to the fund. (12 x $1,000 monthly contributions)
    This will allow me to continue my investments without trying to time the market. Obviously I will be working to time the positions that I put them in, but not the market overall.

  2. Return of >10%.
    Always will be the most difficult but I believe that I will be able to do it. Even with a tough quarter to end last year I am still at an annualized return above 10%. This was done with many different mistakes but I have a plan that I will lay out later that I believe will make this happen.

  3. Est. Yearly Dividend Income of >$2000
    Passive income is very important to me and dividend income is one of the greatest passive income creators of all time. At around $36000 as my goal to end the year this would mean a yield on cost of about 5.5%. This should definitely be able to be accomplished.

THE STRATEGY

I have recently been working hard to invest not only in the market but also in myself and my knowledge base. There are a couple of things that I learned last year and along with that I have tried to skew my vision on my investing plan.

Initially the fund was created with the goal to create an abundance of dividend income while also getting companies at a great value. While this is still the goal, and always will be, I believe that I became focused way too much on what my estimated dividend income was on a month to month basis instead of what my actual returns were on the companies that I purchased. This led me often to invest in companies that I believed had value, but not the value that I necessarily wanted.

Impatience is a killer.

While reviewing what happened in 2018, especially in December I realized that my valuations (if I would have continued to look at them) were sky high on most of the companies I owned. I also know this was true because for the most part of 2018 I didn’t add money to my portfolio purely because I found it so tough to find good companies to purchase.

This should have been an indication that I needed to begin taking profits.

Along the same lines I have this new strategy to make sure that I optimize not only my dividend income but also my returns.

  1. If I would never put money into a position at the current price than I really need to look at selling it (or a portion).
    Purely just logical sense on this one. If I think it is overvalued enough that I need it to drop significantly to buy again, then I need to look at dropping the position and patiently waiting for it to come back down to earth.

  2. Have at least 20% of cash on hands at all times.
    After missing some opportunities in the December correction that would have driven the fund forward I have realized that I need to keep enough cash on hand at all times to make some sizable moves if another drop occurs.

  3. Know my CURRENT valuations.
    While we all are very good at researching and quantifying a company’s valuation before we purchase, what I sometimes struggle with is keeping up with the current valuation and working off of it. I move to the next piece of research and leave the most important things, my actual positions, in the dust. I need to be better at this.

conclusion

The first step in any plan is to set the goals that you want to accomplish. Now that these have been set, as well with a couple of strategies to complete them, I hope to make 2019 the funds best year. In a year that many are claiming to contain a regression or potential market downturn I hope to exercise my patience and common sense to maximize my portfolio’s gains.