Keeping and Eye on My Dividend Portfolio Goals

At the beginning of the year I set up both a short-term and long-term portfolio goal. The purpose of these goals were to ensure that I kept on track with my investment contributions and that I followed my investment process. Without goals I find that I can become scattered in my approach and make decisions that are on the fly as opposed to decisions that are methodical and with distinct purpose.

As a recap, my short-term goal was to have a portfolio value of $70,000 by the end of 2008. Short-term investment goals in the form of pure portfolio value can be tricky because they are totally at the mercy of the short-term swings in the market. Some people simply set short-term investment goals as a certain level of contributions as opposed to portfolio value. That is something they can control (for the most part).

However, I set my short-term goal as a portfolio value for two reasons. The first was already mentioned above – I wanted to ensure as part of this goal that I continued to contribute a specific amount to my portfolio through the year. The second part of this goal was risk-management specific. I wanted to ensure that I focused on building an effective asset allocation that allowed for good growth as well as managed risk appropriately. Hence, I have done a lot of work this year on getting my asset allocation in line. Of course this is not going to ensure I hit a top end number, but it will limit my downside risk. The $70,000 goal I set is aggressive but it keeps me focused on what I need to do during the portfolio construction process.

So how am I doing to this goal six months into the year? I was still a good amount off my goal, thanks to the whole sub-prime mess and my overweighting in the banking stocks. However, my vested employee stock options have done well this year and it has actually added a good deal of value to my portfolio. In addition, I have been religiously contributing to my portfolio which has at least taken me closer to the goal. Here is the beautiful chart I set up using Numbers on my Macbook:

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My long-term goal is $300,000 and obviously I am a long way off from that goal. However, for this goal my purpose is to ensure that I am tracking consistently higher each and every year. Again contributions and a good asset allocation are important to meet this goal as the market is going to go up and down during the short-term. However, I know through research that the market always heads up over time so I am confident that will help me in the long run. Again, here is the chart I set up to visually represent my progress:

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Goals are crucial to keeping on track and focusing your actions on what is important. If you have not already done so, I would recommend setting up some of your own goals. They do not need to be overly complex or huge. Most importantly they must be attainable so that you do not get discouraged and alter from your chosen course of action.