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My goals for 2015

Early each year, I try to discuss what my goals for the next few years are. However, I really do not like to set financial goals. Rather, I try to behave in a way that fosters wealth building.  This helps me stay on task an accomplish those goals, better than simply setting up goals.

Between 2007/2008 and 2012, I put most of my money in taxable accounts. My dividend income was growing exponentially, I was reinvesting it back into more dividend paying stocks. I was able to achieve that by constantly saving money and also by focusing on growing income. As I made more money from job, dividends and other sources however, I noticed that I was paying way too much in taxes. Those dollars were lost forever to the tax-person, and were hard earned dollars which would never compound for me. As a result, I made a decision to max out my tax-deferred accounts in early 2013. Those accounts include:

- Pre-tax 401 (k), where each dollar deferred results in immediate savings of 30% (Fed and State)
- Pre-tax SEP IRA, where each dollar deferred also results in immediate savings of 30%
Roth IRA, where each dollar earned will compound tax-free and be tax-free upon distribution when I become 59 ½ years old
- Health Savings Account, where each dollar deferred results in immediate savings of over 37.60% ( defers Federal, State and FICA taxes)

The types of companies I might add to in 2015, if their valuations are right and things do not change:

Baxter International Inc. (BAX) develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney diseases, trauma, and other chronic and acute medical conditions. The company has raised dividends for 8 years in a row. In the past decade, the company has managed to boost dividends by 13.20%/year. Currently, the stock is selling for 14.80 times earnings and yields 2.90%. Check my analysis of Baxter.

Diageo plc (DEO) manufactures and distributes premium drinks such as Johnnie Walker, Crown Royal, Buchanan’s, J&B, Baileys, Smirnoff, Captain Morgan, Guinness, Shui Jing Fang, and Yenì Raki.. The company has raised dividends for 15 years in a row. In the past decade, the company has managed to boost dividends by 5.80%/year. Currently, the stock is selling for times earnings and yields 2.70%. Check my analysis of Diageo.

Exxon Mobil Corporation (XOM) explores and produces for crude oil and natural gas. The company has raised dividends for 32 years in a row. In the past decade, the company has managed to boost dividends by 9.80%/year. Currently, this dividend champion is selling for 12.50 times earnings and yields 3%. Check my analysis of Exxon Mobil.

Unilever PLC (UL) operates as a fast-moving consumer goods company in Asia, Africa, the Middle East, Turkey, Russia, Ukraine, Belarus, Europe, and the Americas. The company operates through Personal Care, Foods, Refreshment, and Home Care segments. The company has raised dividends for 19 years in a row. In the past decade, the company has managed to boost dividends by 7.50%/year. Currently, this international dividend achiever is selling for 21.30 times earnings and yields 3.50%. Check my analysis of Unilever.

United Technologies Corporation (UTX) provides technology products and services to the building systems and aerospace industries worldwide. The company has raised dividends for 21 years in a row. In the past decade, the company has managed to boost dividends by 12.90%/year. Currently, this dividend achiever is selling for 17.70 times earnings and yields 2%. Check my analysis of United Technologies.

Just like companies continuously streamline their operations, and cut unnecessary costs, I also want to challenge you to review your largest expense items and look for ways to reduce them. My main expense item was taxes, which I have cut to the bone right now. The other major expense item is housing, which is a major expense item for most households in the US. So while I do not really look at formal goals, I have the mindset to continuously try to improve investment process, eliminate unnecessary expenses, and increase income in a sustainable way.

Housing is another opportunity I have continuously dismissed since starting this site in 2008. I have never owned a house/apartment. The more I think about it, the more I realize that I have been throwing money out the window by renting all those years. Of course, since I have changed jobs every 2 – 3 years, and changed cities and states in the process, it always made sense to rent. However, if I were to settle in one place for say a decade, it might make sense to buy a condo/house that is slightly larger than the places I have been renting ( but not a McMansion). Since I am not handy at all however ( as evidenced by the poor design layout of this website), owning a house sounds like a money and time pit right now. But were I to stay in one place for 10 years, it might be worth it to capitalize my expenses for housing. Everyone needs a place to stay, which is why capitalizing an expense might not fit with initial goals, but would make me better off overall.

So to summarize, the most important thing someone can do is have the mindset that is conducive of achieving the life they want to live. If you consciously live your life in a way that fosters health, wealth and quality relationships on a daily basis, you will achieve a lot more than merely setting goals or New Year's resolutions. Goals can be helpful for many, but it is more important to have the plan to accomplish something by having the mindset of accomplishing it. It is good to have goals, but do not blindly follow them for goals sake, and do not take actions merely to check a goal off the list, while potentially hurting your situation by limiting yourself too narrowly.

Full Disclosure: I own UL, DEO, UTX, XOM, BAX

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