The plan
moneyrelations :: Aug.02.2007
If I’m going to be rich, I need a plan. Sounds obvious, eh? For those who blog about investing, they usually want to retire early. I personally don’t have a specific age in mind, so where does that leave me?
I’m “content” at my work. According to Workopolis, I am at the high-end of the salary scale for what I do. It pays well and it’s not demanding; I have job security and a good pension and benefits plan. However, I also know that I have no room for growth at my position. Will I be content in my job when I see friends in my age group ascending the corporate ladder? It’s happening now. For me, this was one of the incentives to get serious about my finances. I don’t know if I will be doing the same job for the rest of my career but I want the flexibility to walk away if I so choose. So, for the sake of having a numeric goal in those online calculators, I’ll settle for a million dollars in liquid assets by the time I’m 40. I think this is an achievable goal as I’m debt free, liquid, and I have no dependents. Life changing events will indubitably happen between now and then, but this is still attainable.
With the number and timeline decided, I’m planning on putting 95% of my investment money into ETFs or index funds and leave 5% for “mad money”. I hope “mad money” will turn into “money very well spent” as I’m going to break out of my habit of speculating on things I don’t understand. It’s extremely hard to make an informed decision when you are reading an annual report but you do not understand the business. It’s also frustrating when your stock is going down but you don’t know what economic pressures are involved in its descent even after a positive news release. Therefore, I’m going to take Warren Buffett’s advice of working within my “circle of competence” and “buying businesses I would be willing to own forever”. Is this naïvité on my part or am I being a Buffett fangirl? Perhaps it’s a bit of both but it sure beats my previous non-strategy. If I prove to be more skilled at stock picking this time around, I’ll up my self-managed portfolio to 10%.
So, that’s my simple plan as it stands. It’s not much but it’s a big step when you put pen to paper ASCII characters on a screen and decide you are going to become a millionaire. It may not be enough to fund retirement at 40 but it is a step in the right direction!
Investing ::
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curious for your taken on the beating Wi-Lan took yesterday. What did you like about the company initially, and how about now? Are you increasing your stake?
Wi-Lan is driving me nuts. I have no clue what is going on with this. My initial thinking was that suing = big bucks. The Early Licensing Program would generate some news and I’d cash out early. I never expected to hold long term. Even with the recent news of Fujitsu to license Wi-Lan patents, this stock nose-dived. I chalked that up to the general selloff and it would bounce back. It hasn’t. It signed with Powerstar International Inc. and down it went again. Are investors disappointed that only 5 companies stepped up on the ELP? It is estimated that they generated $75 million of revenue with the program. I guess that’s considered bad since they had 160 infringers? What were the expectations? They have $100 million in the war chest but is that enough to be spread out if it’s a long, drawn out process in court? They also recently acquired the V-chip parental control patents that was mandated by the U.S. FCC to go into digital TV boxes, recorders, etc. effective March 2007. So with all this news, it still isn’t enough to prop up the stock? I haven’t added my position because I just don’t understand the business enough to read between the lines. What am I not seeing to justify this massacre? I think Wi-Lan investors are on the same drugs as their Biovail counterparts.
I think a plan is essential, even if you are not so sure the path to take yet. If you have a goal then it is easier to start working towards this and researching next steps. I wish you all the best to $1 million by 40 (and will be inspired- oh sigh and jealous- to see you reach that goal).