First things first: As the image shows (and you know that I speak a lot through my pictures), life is not all about money and targets… There is also something else, which is actually more important than making money. Having said that, I also believe that money do help in having a better life, so it should be regulated as much as possible…
Maybe I should write a little about the whole concept of targets to someone who’s never invested before.
I am a great fan of KPIs in my work life, they help me understand how really one is doing and if the strategies put in place need reassessing or we can leave them as they are.
Investments are more or less the same, they need to be treated without special sentimental attachment (this can be a difficult part), but most importantly they need to be assessed looking at the targets that one has set at the beginning of the investment itself.
I do not think that there is a special “rule”. Some people say that stocks should have higher targets because they are more volatile, I think that much depends with the philosophy of the investment rather than with the type of instrument that you picked.
These years are unchartered territory for the bond markets and generally the state debt. What once was considered “2%/3% sacred return” (meaning that it was guarantee), nowadays if much more volatile than some Blue Chips in the stock market (for example the ex-government utilities).
Going to targets this year, I try to live in the present and my target for the first year is to have a NET return of 2% over the portfolio that I have created. Not exciting, but better than a saving account. One could argue that ETFs could be better if the target is that, but since it’s the start of the adventure, and I foresee that trading costs are going to be heavier in the first couple of years, I have to set the bar low, the real check “Stalflare vs. Managed accouts/funds” will happen in year 3.
In the Portfolio section of the site you’ll get a summary and some more explanations regarding my method of calculation.
As I mentioned in a previous post, no target for savings this year, my life it’s still pretty much in an evolving stage so I need the luxury of not having to respect targets on that side, although I am pretty sure that I can do well!