Discover more from Tiago’s Newsletter
What I'm doing in 2022
2021 is almost over, and it is now time to start looking into the future
2021 has gone by fast hasn’t it?
It feels like it was just yesterday that we were welcoming in the new year after a troubled 2020, and yet it’s already December and we are looking at 2022 just around a corner.
Today we will be having a look forward to 2022, setting our goals, and discussing some of the changes we will be doing throughout the year.
Ultimately my goals for 2022 are the same as my goals for 2021, I mean to:
Continue on my path to financial independence
Learn more about investing
Avoid the errors and pitfalls I’ve fallen into
Of course those aren’t very actionable goals, now are they?
So let’s put some that are actually measurable and feasible:
Increase my Assets Under Management to at least twice my Gross Annual Wage
Increase my Annual Dividend Income to $1500 USD
Beat the returns of my index (VWCE)
I think all of these goals are possible, if difficult to achieve.
The most difficult one will be number 1 since it will be quite a substantial increase over my current Assets Under Management. While it is technically possible, it will require extremely good market conditions in order to enable a combination of Capital Gains and new investments.
Ultimately I don’t think I’ll reach it, but I think I’ll get close enough to be satisfied.
Item 2 I believe is probably the easiest, since my current dividend income so far this year will be around $950. While a 57% increase in dividend income is quite high, I expect that a combination of dividend increases, new investments, and slightly higher yielding stocks will make it possible.
Finally Item 3 I also believe is doable. Ultimately I think my strategy of value investing combined with options selling will be enough to give me the edge over the index.
I don’t expect the edge to be particularly big, especially since I mean to increase my index holdings, but I’m just fine cutting into my upside if it means my downside is slightly safer.
Overall, these are goals that I can achieve, that I can measure, and that will fit well into my plans for financial independence.
You may have noticed that I mentioned I was going to increase my index holdings…
That is simply one of several actions I will be taking with my portfolio in the coming year, in order to better suit my goals, objectives and tax incentives.
Some of the changes I will make are as follows:
Reduce the number of individual holdings to only undervalued issues
Increase my Index holdings to at least 60% of my portfolio
Overall both of these changes are intended to work together, and effectively counter each other.
My Index holdings don’t pay dividends, and as such they will not result in taxable events until I choose to sell them.
Since I am past the tax-free amount of investment Income I am allowed to claim on my taxes, shifting my portfolio from taxable individual issues onto un-taxed Indexes will reduce my tax expense and improve my returns.
Furthermore, the index is significantly more diversified than my individual choices, and as such, by having it take on an even greater portion of the portfolio I will be more diversified than I am today, despite the fact that I will be selling my “duds” and focusing on the companies I believe have the most potential.
This means I can be freer to gain some alpha on my individual issues, while still keeping enough of my net worth in safer index holdings.
What about you?
What’s you plan? Are you making any changes for 2022?
Let me know in the comments below!
And of course, Happy New Years!