After a financially fabulous 2017, my primary focus for 2018 is simply to avoid messing up by becoming overconfident.
Equity markets are at levels ranging from very expensive (USA) to moderately valued (several emerging markets). The same can be said about real estate prices. Cheap is hard to find and I have no expectations that further capital gains will be achieved in 2018. Accordingly, my focus will be on cash flow from investments. Specifically, I would like to see my net cashflow from investments grow by enough to compensate for inflation (say, 3%) without simply reaching for yields that may not be sustainable over the longer term.
Part of this growth should come from companies paying higher dividends. The balance will come from a combination of deploying cash into new investments and some from recycling existing investments. I am not factoring in any increase in rental levels. Given the dividend expectations for my larger equity holdings, one small mortgage being paid off later this year and the proposal to reduce the corporate tax rate on small businesses the target increase of 3% appears almost too easy but ....
.... all properties are currently leased but some leases fall into break periods this year and, if the tenants move out, not only will there be a loss of rental income but there will also be the not insignificant cost of redecorating and finding a new tenant; and
.... I am considering buying a completely unnecessary car which will involve not only shifting the cost of the car from an income producing asset to a cost generating liability but also the loss of income from a car parking space; and
.... I received a small consultancy fee in 2017 and it uncertain whether that will be repeated in 2018; and
.... FX changes can have an impact.
Later in 2018 a small mortgage will be paid off. I am considering whether to remortgage the property and invest the money elsewhere. I some respects, applying for a new mortgage would be a test as to whether the banks will still lend to me now that I am no longer employed?
Longer term, I still wish to acquire an additional property in Hong Kong but high prices and the double stamp duty make this a non-starter at present. I also wish to buy another property in Auckland but, once again, high prices are a deterrent.
On non-financial matters, I have reluctantly accepted that I will not be doing the Hong Kong marathon this year but hope to be able to train for 2019. Also on the list is self publishing my second novel (hugely optimistic) and completing both the substantive chapters of my thesis and my remaining coursework credits by year end.