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$6,000 in 2006!

This is not really a New Year's Resolution, as it is part of my 10-Year Plan, but you can call it that if you like. By December 31, 2006, at 24:00 hours, I am requiring of myself to have contributed $6,000 into my 10-Year Plan. Essentially, I could get by easily enough by contributing $500 per month, or $250 per paycheck (I get payed semi-monthly). Obviously, this my plan.


Currently, I have already contributed $26, which is a tad of a headstart, as my first paycheck in the new year does not get deposited until January 13th (it is for January 15th, but that is a Sunday, and I always get paid on a day of business). As noted in Reducing Your "Latte Factor" Easily, I started an HSBC Direct Online Savings Account. I opened the account with $1, and I get a $25 bonus for using the promotional code of "start."




I have decided that I really need to contribute $250 per paycheck regardless of whether I meet the goal early, or not. There is no reason to stop just because I reached this little short term goal. I have a much larger goal to meet, and I will not get their by short changing myself. The goal of $1,000,000 is going to be very difficult to do within the next ten years, especially considering that I will only make about $600,000 over that period of time if I keep my current employment status and get minimal raises over that period of time.


Obviously, I will not reach the goal if I am merely saving $500 per month and getting a return of 4.25%. As I have stated, already, I will be increasing my contributions by 15%, annually. So, for 2007, my goal will be to contribute $6,900. So, during the tenth year, I will be contributing a minimum of $21,107.26, for a grand total of $121,822.30 contributed over the ten year period. So, that is well short of the goal of $1,000,000. Given a 4.25% annual percentage yeild, it will only end up with slightly more than $147,000.


The plan is to have multiple investments. When I get a substantial amount of capital, I will invest in mutual funds, and hopefully get an average return near 10%. This will not happen until I can get about $5,000 saved up (so later this year). Further, that will still not be enough. So, I plan on leveraging my assets to purchase some investment properties at decent rates and then I will hold them for a few years and lease them out. As the years pass, the tenants will be building equity in the properties for me. Also, despite the doom and gloom reported by the "experts," the properties' values will increase. I know this because I will not be purchasing properties in saturated areas, and I will be improving the properties. After I have built enough equity in the properties via appreciation and paying down the principal, I will sell the properties and invest the gains in more mutual funds. These gains will not be considered part of my contributions, as they will be created by leveraging my existing contributions. Hence, additional return.


The goal is to have an average return of 40% throughout the ten years. Maybe I will get there, maybe I won't. However, I will certainly lose if I do nothing.


And for the naysayers... I don't care that $1,000,000 will not be worth the same as it does today! No matter what day and age, I am sure I would rather have $1,000,000 than not. Further, this is for ten years from now... not 30.



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Anonymous Harrison Says:

January 04, 2006 7:29 PM 

Nice plan at the starting of year 2006. Everybody have different plan to achieve different thing in life. However, once you plan it and stick to it, you will be success. Keep focus and take action. Action is power!

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