For more details on the relevance of these ratios, please see this How Much Is Needed To Be Wealthy - The NUMBER.
Ratio and Target
Income to Salary
|2011 has started out poorly due to a slight negative return for my company stock. As my company stock (hopefully) advances, we plan to continue selling shares and increasing diversification, primarily in large cap dividend paying stocks.|
|Savings to Salary|
2007=23 2008=16.7 2009=15.3
|16.3||16.1||Although it feels like our retirement savings have stabilized, I think the second half of 2011 may be weak. I sold most of our stock investments in June 2011, but still have my company stock and stock options. The change mainly reflects the change in my company stock.|
|Debt to Salary|
2007=1.51 2008=1.46 2009=0
|We said bye-bye to our mortgage on May 20, 2009. Eliminating a mortgage payment has reduced our expenses by 24%.|
My financial goals for 2011 are:
1. Continue to maintain an Investment Income to Salary ratio > 0.8. (off track)
2. Maintain a Savings to Salary ratio of 20. (off track)
3. Maintain Debt to Salary Ratio at 0. (met final goal of 0)
(For reference, Salary refers to gross salary just prior to early retirement in October, 2007.)
Both #1 and #2 were directly correlated with how well our stock, bond, and CD investments returns. With the poor performance of my company stock and the high proportion of cash, our portfolio declined less than the indices in Q3.
It has been very challenging retiring at the beginning of a bear market. Our short term expenses (next 3-5 years) are invested in CDs, bonds and money markets. So we can wait for the stock market to continue an upward trend, hopefully through 2012. I continue to be concerned about volatility of our investment portfolio, but believe there is more upside than downside potential going forward.
I continue to have the same financial goals for 2011. At this point, I am pessimistic about the economy and the stock market.
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This is not financial advice. Please consult a professional advisor.
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