Wednesday, 18 January 2012

Financial Goals for 2012

Time has been flying by for me these past couple of days. We are already past the half way mark for January. My portfolio has been recovering nicely since we rang in the new year. While this is good news, I've been having difficulty deploying funds because I can't find attractive entry points. The issue is that a mere couple months ago, all the stocks that I keep an eye on were much cheaper. It can be argued that some of them are still at a nice valuation but I'm going to take a page out of my girlfriend's book on shopping, I just saw them on sale - there's no way I'm going to buy them for more than I know I can get them for.

Now that 2012 is in full swing, I'm sitting on some cash that I transferred from my TFSA savings account to my TFSA margin account and waiting for the right time to pounce. I guess that's how it goes sometimes, when you want to invest, there's not enough money and when you have some cash, there's nowhere to put it. Along with investing in my TFSA margin account, I have some other goals for the year that I'll hopefully be able to accomplish.

In terms of saving, I intend to put away $5000 for next year's contribution to my TFSA. This is a realistic goal for me because I usually work full time in the summer which would earn me roughly $5000. Working during the school year helps me get some extra spending money. I would also like to save $5000 for investments in my non registered accounts. This totals at least half (although I'm sure more than half) of my annual income. I'm already working full time in the summer and 3 days a week during the school year so increasing income may be tough. The other route is to spend less so hopefully I get my budgeting in check soon (and we all know how well that's been going).

In terms of investing, I plan to diversify a bit more. I'm heavily weighted in financials because they were hit hard when I started and I bought what was cheap. Now I would like to branch out a bit more. I'm keeping my eye on telecoms specifically. The Big Three - Rogers, Bell and Telus, all pique my interest and I'd be happy to add them to my portfolio (at the right price of course). I'm looking at consumer goods and retail sectors as well.

Although I believe in the buy and hold strategy with solid dividend payers, it's difficult to sit on your hands and do nothing when you're making a profit on a stock. I'm not sure if I'm the only one, but I'd rather have my stock taking a loss. It deters me from wanting to sell my shares and I'm more willing to buy additional shares (after reevaluating and coming to the conclusion that the investment is still sound). Besides, as long as you don't lock in the loss by selling the position then you still have the chance of riding the stock back up.

The hard part is when you're making money and want to lock it in by selling. So in light of that fact, I would like to use a small, very small, a sliver of my portfolio to do some trading. That way I would leave investments alone and let them carry out my plan while I relieve my urge to do something. I plan to make plays on precious metals for my trading.

As for my actual investments, I'm currently on track to earn $1375.35 in dividends. I would like to get up to $2500 because it's a nice round number but that seems to be a bit too ambitious. I'll settle for $2200 which is still going to be pretty hard to obtain but hopefully there will be some dividend increases in some of my positions to help me get there.

I'd also like to get rid of positions I have in some index ETFs that I decided to buy when I first started investing. I like going the dividend route as opposed to the index one although many bloggers I follow have a hybrid investing style that incorporates both strategies. I'm having difficulties taking a loss on them though and I know I'm incurring opportunity costs by holding on to them so it's something that I'll have to overcome. By the end of the year I'm going to be rid of them - one way or the other (though hopefully the way where I make some money off them).

I'll be checking up on these goals by the end of 2012 and if everything goes according to plan then I'll have progressed substantially in my financial life. This is going to be fun...right?

-the Paperboy

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