Saturday, December 13, 2014

Revisiting Projection Target for 2015

I've been wanting to revisit my projection target for some time now but fails to do it everytime I said it to myself. Some readers have also asked regarding how I came up with my projection target so I thought this would be a good time to explain them.

When I set my projection target back then in 2011, I was leading a single life with an aggressive mode of savings plan with very little mandatory expenses to care for. Saving money was very simple back then. If I feel I wanted an extra challenge to save more money for the week, I'll settle for hawker food all week long and stay out of the malls for the weekends. I am an introvert by nature so staying weekends to play either Football Manager or watching drama would make me very satisfied. Those who played the game or has a habit of watching drama would know what I am talking about. They are addictive in nature so time would pass by extremely quickly. On good times, I could save up to around 90% of my pay. On average, they are usually in between 80% to 85%.

Given the situation back then, I made a very stretched projection target for myself to retire (or semi-retire) from the corporate office by 2020, accumulating $1,414,705.83 in the process and yielding passive income enough to pay for my household expenses. This was done by injecting $60,000/year or $5,000/month and yielding a dividend rate of 6% reinvested into the portfolio. I took out all the other assumptions such as bull or bear scenario because it is something I cannot predict anyway.

Projection Target (Original)
YearYearStarting CapitalCumulative Annual Capital Injection Dividends on Starting CapitalTotal Yearly Dividend PayoutMonthly Passive Income

Dividend yield of 6% per annum was somewhat the baseline target I would like to achieve at the end of the day. Of course, judging by my current portfolio, it is yielding at around 5.14% right now so it's not a major problem I would foresee going into the future.

Capital injection of $60,000/year or $5,000/month is the key to the acceleration and this pose a bigger problem going into the future. I was drawing around gross at $5,000/month back in 2012 (I only received started contributing to CPF in 2013 after my SPR application was approved) so the amount of capital injection projected was based on 100% savings rate to target for. Of course, there is still the allowances, 13th month and performance bonus which I did not include that played a part as well but the idea of injecting the full $5,000/month was stretched. I was pretty sure that this was not going to be sustainable but I keep it as it is until today.

Getting a higher education, married life and a kid change the whole perspective of my financial set up today. I am drawing a higher salary compared to back then but the expenses have gone faster than the increase in income. I have also since started my contribution to the CPF since 2013 so the net salary I am taking home has very much been reduced. I am no longer able to save in the high end of the bracket like I used to in the past. These days, I am usually looking at the 50% rate as a personal target. Anything above that, I would consider the month to be extremely successful.

With that in mind, I will be doing a revised projection target by using a rolling forecast method to incorporate my short term target. Since I am using the rolling forecast methodology, I will be revisiting them regularly to see where I stand at certain situations and make changes to them more regularly. The advantage of doing this is I can incorporate changes whenever there are a bull or bear case scenario that are not within our control.

The changes I would make to this is to the capital injection which I have revised from $60,000/year to $36,000/year ($3,000/month). The current starting capital and dividend yield rate would remain as what I currently have in my portfolio. Even though there might be a chance that I will miss out on my 2020 target or possibly face a bear case scenario in the market, I think it's much more realistic to project a short term target this way.

Short-term Projection Target (Rolling Forecast Method)
YearYearStarting CapitalCumulative Annual Capital Injection Dividends on Starting CapitalTotal Yearly Dividend PayoutMonthly Passive Income

*Based on market value as at Nov 14 portfolio update

I'll be updating my About Me page in a while to incorporate these changes and provide a more realistic and sustainable way of tracking them.

What do you think of the idea? How would you plan for your short term target?Interested to know on some of the other methodology other people are using.


  1. Hi B,

    I did it abit differently from yours.
    1. I track the amount of monies (capital) which include rights issues, scrips n etc that I put in since day 1.
    2. I didn't apply a flat yield based on capital amount, because it will place a mental limit to what I'm going to buy or sell. Its also not a correct reflection ie when I buy the stock, it may be 1.x%-4.x%, but over a long period of time, it could be higher than 5% based on yield on initial investment cost. What I do is a rolling forecast on dividend payout. For example, if this REIT gives 2 cents this quarter, I will multiply by 4 quarters and based on my holdings. The same apply to others as well. If this stock is giving me 20 cents per year, I will apply this to my holdings. This will help to capture the latest dividend payouts. I will take out the special dividend portion for the dividend forecast.


    1. Hi MS

      Thanks for your suggestion there.

      The flat yield is indeed an easy way out to calculate the projection but given the assumption like you said that it's going to possibly increase in the future, I'll take it as a base case conservative scenario. In fact, going by the market here, I don't think we'll see a big bear scenario over the next 12 months so likely the payout is going to increase. But definitely your way of doing it there will be much more accurate there.

  2. It's great to have a review from time to time to see if we are on track. From your original projection, I do not understand your computation for the total yearly dividend payout. Could you kindly explain how you arrive at those figures?


    Renewed investor

    1. Hi Renewed Investor

      Thanks for your kind comments.

      The total yearly dividend payout is taken by multiplying the projected dividend rate to the capital + capital injection for that particular year. It's really about how much payout will you get assuming you input all injection in that year.

  3. Hi B,

    I believe I share a similar situation, with two boys aged 2 years and 11 months respectively. They're keeping me busy physically, mentally and of course financially.

    50% is definitely an achievable target. I gave me a harsher target, which really stretches my finances and my creativity (to save and earn more).

    Hopefully, I can build a comfortable portfolio in 15 years' time so that working becomes a choice, not a need to put food on the table.

    1. Hi SRSI

      Can you share what is your stretched target for your savings? It's amazing you have two children and still manage to save a huge sum of amount of money there.

    2. My stretched target is 70% of my take-home salary, which is crazy really.

      But I had been able to do so by simplifying my lifestyle. E.g. $3 lunch, no drinks outside, bus & MRT only, no vacation (since my boys are still young).

      Some people may find my life miserable. Haha. But I don't scrimp on fresh food for my family.

    3. Hi SRSI

      Wow 70% target is really stretched. I am.not sure even a single person can save that high unless the absolute figure are really high we are talking about.

      Ive to sacrifice along the way as well such as no vacations no shopping and really the great singapore sale is about only buying shares no more anything on the retail. Lol

  4. B,

    Reality change; plans change.

    Note it's NOT the other way round. I think you can find quite a few plans and goal settings out there "expecting" reality to conform to their plans.

    That's perhaps why most institutions and countries stop at 5 year plans. With time, you'll gain more insights on your own why I like to "poke" at superficial goal settings and planning. (While you are at it, you may want to investigate the comical IMF growth projections for the past 5 years - with all the PHDs and econ gurus some more!?)

    Lots of changes within 5 years in your own life right? Now imagine planning 10, 20, 30 years into the future? And that's not sticking a finger into the air? LOL!

    Then how to leaders do their strategic planning?

    They have a DREAM.

    1. Hi SMOL

      Absolutely spot on there.

      10 year target is usually a vision, to pull the votes in, then they do the short term 3 year target and then make subsequent changes to it. do 1 year forecast.can change 10 times in a year, waste resources or efficient still.not sure.

    2. Hi SMOL,

      I had personally attended CEO & high level executives of 3-4 billons euro listed company presenting behind close doors in their annual strategy meeting on 3-5 year plans. Before plan implemented, within a year, top management restructuring, CEO replaced and all the plans that took high levels executive painstaking work (maybe their secretary do the work) were forgotten. Then come new CEO new set of 5yr plans again! Hahaha...

      Wayang is part of survival in corporate world!

  5. Wow, millionaire by 2019! You're going to do it, good luck!

    1. Hi Henry


      I hope it will happen though there are a lot of other variable factors to think about.

      Take care too over there.

  6. Hi B,

    Good job there! I think 36k per year injection is going to be more realistic going forward. It's very different when we're single and when we're married and when we have kids. The financial implications must be taken into consideration. As a single, I can be very low maintenance, but it's going to be hard with another person living with you. With kids, you'll naturally want to spend a little more on them.

    I'll say never sacrifice such ties for money. Money can be earned back, but once that opportunity to bond is over, it's over.

    I'm sure you're do well :)

    1. Hi LP

      Thanks foe the suggestion and sharing your experience.

      I got the inspiration after you wrote on your short term goals. Many times we feel disappointed not achieving the target even though we did relatively well, just like how Apple has missed estimates by earning billions of bottomline. It doesnt seem to make sense but it disappoints.

      Having an achievable and reasonable target make one live easier and do not give inward and outward pressure to oneself :)

  7. Hey B,

    I think it looks like a really sensible and achievable plan, by not needing a huge bull market as part of your goals. You'll have seen I just posted my own goals, and I don't see myself being able to contribute such large amounts each month, as least in the near future, so I really need to achieve some great returns to achieve my goal.

    Look forward to continuing to follow your progress towards this goal!



    1. Hi Jason

      I've seen on your 2015 goals and they are indeed much more sensible and reasonable to achieve as well.

      We try to be realistic yet at the same time set a stretched target for ourselves. I think it did justice to you :)

  8. Hi B,

    For most people, they feel "a little bad" themselves when they lower a goal they set for themselves. After all, we are told to set ambitious goals since young. =p

    But I really don't think you should. The fact that you managed to save $60k for a few years is a pretty crazy achievement.

    And so what if you can't get $1,414,705.83 by 2020. I am sure $1.2 million would do just fine for you? And even if not 2020, 2021 or 2022 should be great too!

    All the best for your saving goal next year!

    1. Hi 15hww

      Thanks for your kind words.

      I think what you said makes very good sense. We might not achieve what we want today but there is always tomorrow and the next day after. I hope it doesnt deviate long enough though.

      I hope it'll be a good new year for you too in 2015. Good plan led to the right achievement which in turn will lead back to another good plan and so on. All the best to you and Mrs hww in 2015 :)

  9. Our focus in life is constantly changing and hence the plan need to be adjusted accordingly too.

    Keep going and keep growing...

    1. Hi Richard

      Thanks for the wise word from guru :)

      Plan well for the future you and adjust to those changes. I will always remember that from you. ^^

  10. Grasshoppers are laughing at Ants? Let see who laughs last?

    Most regrets of the dying will regret on things that they didn't do but NOT on things that they have done.

    So go ahead to plan and plan well. Even you didn't make it good. It won't be one of those regrets when dying.


    1. Hi Uncle CW

      I still remember well the stories for the grasshopper and the ants. I forgot though comes from you or SMOL.

      I guess I want to be the grasshopper and remember all the good things when I leave this earth one day. The memories I will bring with me.

    2. Yalor. We must know how much is enough when we are Ants and then transform to become Grasshoppers to remember all the good things before it is too late. We cannot be Ants forever!

  11. I think if one can save 10% or more of their income to invest into stocks is very good already, so 3k a month savings is really a lot, keep up the good work ^^

    1. Hi Felix

      Thanks for the encouragement.

      10% savings I guess is the national.benchmark to save for those who has a bad habit of spending money away. I think financial.bloggers usually do better than that assuming not much committment from their side. :)

  12. 50% is more than my total savings. everytime i see a table like that it reminds me i need to do some work.

    1. Hi Kyith

      I remember reading somewhere that you contributed to your parents insurance and allowances quite a huge chunk of it. I guess thats an even higher committments to dependency.

  13. Your savings rate is awesome. It is very difficult, if not impossible for most people to save 5K a month

    1. Hi Humbleblogger

      Thanks for visiting the blog.

      Those with higher disposable income probably can do it but with my income right now it is virtually impossible to do it. I've been glad that the market has been rather kind to me the past 4 years.

  14. Hi B!

    I am very impressed with your progress! Millionaire before 2020 is in the horizon. Perhaps when I get married one day and have a kid, my savings would take a hit too but 36,000 inject is still very high!

    1. Hi Jeff

      Thanks for your kind word.

      It is still a long way but finally light at the end of the tunnel.

  15. Hi B,

    Seen this post late and it's very nice to read.

    To set target is great and essential, but failing target is not exactly disastrous! To be able to accept changes coming along and adjust to it is as commendable as reaching target by itself.

    A target should be a motivation for continuous improvement and not just a finishing point. Do not be bewitched by it, maybe that is not happiness. Happiness is having a target that allow us to work towards it and experience all the falls along the way, and learn from it. Without target, work and failure, all we can do is just talk about others experience on the book and blog. One day when we are old, we realized what is life experience all about?

    By the way, I do save 50% of my income, despite "friends" who "dunno" me thought I spend all of it! Hahaha

    May the new year bless you and your family! Keep going!

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