My Medium Term Goals: Echo

Like I said before in my short term goals, what gets measured gets managed.  Goal setting is a big part of my financial plan, and there is no time like the present to get started on some things that may take 1-5 years to develop.

So from building a new house, to maximizing our investment accounts, growing our net worth, and the possibility of a new addition to our family…here are some of my medium term goals:

1.  Upgrade our house – We currently live in a 7 year old 4-level split with about 1200 square feet of total living space.  But with only 2 bedrooms and 1 bathroom, our growing family will not be able to live here for much longer.  The plan is to build a 4 bedroom, 2 bathroom house in a neighborhood closer to where I work.

This process can be nerve racking at the best of times, so with all this talk of a real estate bubble bursting, we have the added pressure of selling our house in a down market.

Meanwhile the cost of building a house continues to rise and the demand for new builds doesn’t seem to be slowing down in our area.  But, my wife and I have the floor plan already picked out, so we’re just saving up some cash and waiting for the right time to get started.

Related: How Much House Can I Afford?

2.  Triple our total investment portfolio in 5 years – Between my pension, RRSP and TFSA accounts I have roughly $70k.  The plan is to triple that value to $210k in the next 5 years.

My TFSA is maxed out annually, but my wife still has contribution room.  And since I changed careers I have stopped contributing to my RRSP.  So the majority of increases will come from monthly pension contributions, annual TFSA contributions, and dividend & organic growth from TFSA and RRSP portfolios.

3.  Increase dividend growth in TFSA and RRSP over 5 years – The plan is to quadruple my annual TFSA dividend income to $2000, and double the annual RRSP dividend income to $3000 in 5 years.  These numbers may look relatively small now but with continued dividend increases and a lot of patience, these dividends will be my main source of income in the future.

4. Increase net worth by $300k in 5 years – Again, this is a culmination of achieving the previous 3 goals.  The challenge will be to live within our means while we upgrade our house, continue to support our growing family, and still manage to max out our TFSA each year.

I’m on pace to achieve a $50k net worth increase this year, but will really need to ramp up our savings and mortgage payments in order to reach my 5 year goal.

Related: Our Fast Track To Financial Freedom

So there is just a glimpse into my plans for the next 1-5 years.  Am I too ambitious?  Too cautious?  Time will tell…

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  1. Big Cajun Man on September 13, 2010 at 1:22 pm

    It’ s good to be aggressive in your planning, but remember that creating artificial hardship can backfire, if you are not careful.

    • Echo on September 13, 2010 at 8:51 pm

      @BCM – I may be agressive in my goal setting, but I am very conservative in forecasting for future income and expenses…basically leaving income flat in my projections. Since we’re not relying on an upcoming salary increase, this will allow us to bank any raises, or modestly increase out lifestyle as we see fit.

      I agree that we don’t need to live like paupers, but in this low interest rate environment I feel it’s important to be aggressive.

  2. Advisor Trevor on September 28, 2011 at 10:39 am

    Hi Echo,

    Maybe you can explain to me why you’re looking to have dividend income inside of your TFSA? Dividend income is already very tax efficient. Surely you have less tax efficient income that you could generate inside your TFSA (and thereby save the tax) and realize your tax efficient dividend income outside your TFSA?

    • Echo on September 28, 2011 at 11:05 am

      @Advisor Trevor
      I’m careful not to confuse tax efficiency with better returns. Sure, a GIC or savings account would be better off in my TFSA, but they are generating next to nothing in interest.

      If I believe dividend growth stocks will perform the best over time, then I don’t see why holding dividend income inside my TFSA is an issue.

      Tax free is better than tax efficient, isn’t it?

      • Advisor Trevor on September 28, 2011 at 11:00 pm

        Hi Echo,

        Thanks for your response. I made the assumption your portfoli would be diversified rather than focused on just one equity class. My mistake.

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