The U.S. stock markets have provided a wild ride over the past year. The S&P 500 stock market index recently posted its best five-month gain since 1938. Yet many people missed out on this. And no wonder.
During the previous five months, the market suffered one of its greatest five month losses, which understandably made investors gun-shy. In fact, many were shoveling money out of stocks instead of into them and so missed the turnaround.
Here are some actual numbers:
- From 01 October 2008 to 28 February 2009, the S&P 500 fell from 1164.74 to 735.09, a decline of 36.89% in five months.
- From 01 March 2009 to 31 July 2009, the S&P 500 rose from 735.09 to 987.48, an increase of 34.33% in five months.
I’m curious how the market fluctuations affected real people. I don’t mean professional investors or financial pundits, but small investors like you and me. Did people panic? Did they stop contributing to their retirement accounts? Did they pull money out? Or did they actually contribute more?
Over the past couple of months, several people have left bitter comments at GRS complaining that they know folks who “lost their retirement savings” in the crash, and sometimes insisting that I not promote the stock market as an investment vehicle. While I appreciate their concern, I don’t share their skepticism. I’m not convinced the market is broken.
Instead, I’ve tried to ignore my own trepidation, have tried to keep in mind Warren Buffett’s maxim: “Be fearful when others are greedy, and be greedy when others are fearful.” This has required a leap of faith.
Over the past year, I’ve consolidated several of my retirement accounts. I’ve taken money that was scattered in a variety of places and swept it into one account. As a result, I’ve posted two major transactions at Fidelity since last September.
Last September 29th — just days before the bottom fell out of the market — I moved about $46,000 into FFNOX, a collection of four index funds. I paid $24.20 per share. I thought I was getting a great deal.
As the market collapsed over the next few days, I felt sick to my stomach. I felt like I had made a terrible mistake. Like many of you, I wondered if I shouldn’t move my money someplace “safe”. But I didn’t do it. Instead, I placed my faith in the advice I’ve been reading for almost five years now. Though I’m well aware that past performance is no guarantee of future results, I took comfort in the record of long-term stock market performance. By early March, I’d become almost stoic about my losses.
When FFNOX bottomed out at $15.46 on March 9th, my investment in it was worth only about $29,000 — a decline of over 40%! By then, however, I wasn’t worried about getting out; I was worried about getting in. I knew that the second half of my retirement accounts was nearly ready to be moved, and I hoped I could invest the money soon. My reasoning was that if I could buy while prices were low (and I had no way of knowing they had actually bottomed out), maybe I could recover some of my losses when (if?) the market began to rise.
I wasn’t able to invest more money until May, however. By then the market had begun to rise — significantly. On May 7th, I bought roughly $49,000 worth of FFNOX at $19.82.
My cost basis for these two transactions at Fidelity — for the bulk of my retirement savings — was $95,020.05 for 4436.069 shares, or about $21.42 per share.
And where is FFNOX today?
As of August 19th, FFNOX is worth $22.44 per share. That’s still $1.76 per share below the price I paid for my first lot, but it’s $2.62 per share more than I paid for my second transaction. This retirement account is now worth $99,545.38, which is $4,525.33 more than my cost. That’s an increase of 4.76% during “the worst economy since the Great Depression”.
But that increase would not have been possible if I hadn’t been able to overcome ignore my fear of uncertainty. (And I’ll admit that there’s a part of me that worries the markets will crumble again tomorrow.)
Now that the economy seems to have turned the corner (or has it?), I’m curious how others reacted to the stock market turmoil. Did you pull your money out? If so, have you put money back into stocks? Did you stand pat? Did you make additional investments? What choices did you make — and why?
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I didn’t struggle with my decision, I knew this was a historic time and so I acted.
I bought more index funds. As much as I could.
Here’s the thing that upsets me when people take their money out of the market: the fear that other people and the media are causing in others. What they need to do is read a little bit of history: this stuff has happened before and will happen again. This is not a unique situation, it just feels like it to us.
The market is NOT broken. Warren Buffett IS right. Things WILL turn around.
That’s the reality.
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I kept my money where it was, and kept the 401(k) contributions going where they went. I didn’t change anything. I wanted to put more into stocks, but there have been mass layoffs in my field and I decided that building my emergency fund was more important.
I will say I learned a couple of things, though. First, when I get near retirement, I’m going to play good defense with my money and get it mostly out of stocks. (I’m in my twenties. I’ve got time. But some of my relatives who are near retirement had a lot of their money in stocks, and I’ve seen exactly how badly that can play out.) And second, I’ve learned that I can’t set goals for how much money I want in my retirement accounts — that way lies madness. I can only set goals for how much I want to contribute.
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I kept dollar cost averaging but I reevaluated my risk tolerance and slightly reduced my stock holdings. I didn’t see an option that was better. I don’t need the money for 25+ years and feel that the market will probably recover by then.
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People invest based on emotions and because they do… they make bad decisions. Ignoring their fear is the best thing they can do when it comes to “reacting to the market”, I’ve know a lot of people that became scared of the market and when their 401(k) was down 40% they cashed out and now they’re looking to getting back in, their emotions got the best of them! Let’s connect the stock market and the real estate market and use the same emotions that the folks who cashed out of their 401(k)’s used. Well now that home value is down 20-30% I should sell it and in 5 years when the market comes back and its value rises back to the value it was in say… 2006, that’s when I want to buy it back. So in other words sell low and buy high. That’s what 50% of the people in the world do with their investments. They get scared and make bad decisions.
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I have a kind of similar dumb luck story because in 2007 I cashed out my company matched retirement account (in Canada, so my RRSP) to buy a house (don’t worry, that was the intention of the account from the get-go).
I remember thinking that I should have moved to safer things because just before my withdrawal the market dropped by a few percent and I got out just after.
Well, after this the market tanked, but real estate in my city is positive for both 2008 and 2009 YOY in my purchase month, and I’ve been dollar costing through the roller coaster bank in to my retirement account (this time with retirement as the goal and not a home purchase). I’m under thirty and starting a retirement fund at what may turn out to possibly be the best time in my generation to be getting in . . . hopefully my random luck continues for the next 30 years
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Goodness, I did NOT pull my money out. I was bummed I didn’t have any extra money to invest with when things really got bad. You know, buy low, sell high. Well, things got really low, so it’s a total buyer’s market out there.
The only thing I did do was re-evaluate my IRA mutual funds, and shift some money out of a crummy fund into a better one with lower fees…something I should have done much sooner.
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I kept everything as it was – continued to invest every two weeks in index mutual funds and my retirement accounts. Here in Canada, thestock index went up almost 33% from Mar-1 to Jul-31 and I love the fact that through dollar-cost averaging I’ve actually come out ahead…or will pretty soon.
It has paid to stay cool. While I had extra funds and could’ve moved them into the market, I decided to beef up my emergency fund instead and that security blanket provides comfort each day.
My estimation though is that with all the trillions $ being pumped into the global economy by governments, we have another bubble in the making except this one is going to be “green” – but I plan to ride it all the way up…and down.
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One of the best comments I heard during this time was from the 401k plan administrator for my office. Granted, he has an interest in us continuing to contribute to our plans, but his take was “hey guys, the entire market is on sale!”.
My husband and I have at least 30 years until we’re ready to retire, so we’re still contributing at least to the point of employer match on our 401k’s as well as maxing out our Roth accounts each year and contributing to the Sharebuilder account that we maintain.
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My plan never changed a bit at either point: Invest automatically every month in low-cost index funds.
I’ve no clue where the market will go next month. But I bet it’ll be up in 30 years.
Also, love the Mr. Market reference.
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Honestly, I got extremely lucky with my investments. I opened my Roth IRA this year with $1000 in January with Vanguard’s Star fund, and added another $1000 in Feb. In March, because it was a mix of stocks and bonds, it was sitting at around $1850. I decided to put in $1200 to get to the threshold for the Total Stock Index. After I did that, it fell a bit more to $2970, but then the recovery happened.
So far this year, I’ve put in $4200, and my account currently sits at $5621.34 – an increase of 33.8%.
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I upped my contributions significantly in October 2008, but that was a fluke of timing – that’s the month where my company match scheme started. I maintained my monthly contributions into the account I’ve been using since 2006, with allocations slightly adjusted upwards in US indexes and down in Asian indexes.
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Writers’ Coin hit it right on the head in the first comment.
I would like to add that, not only has it happened before, but “experts” were reacting the same way as well. In the late 70′s, well respected investment experts declared stocks dead right around the best time to actually invest in stocks. These same people also likely said the opposite during the boom years – “Buy at any price!”
It is those, like Buffett, that rise above the short-term considerations and view the big picture that actually end up buying low instead of selling low.
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Having just started my job last summer, I bought my very first stocks (via index funds in my 401k) the week after the first ginormous market loss in September. I remember the some of the hysteria around the office from the older employees. I can’t say that if I had invested as much and as long as them that I wouldn’t have the same reaction, but I did watch the first 4 months of my contributions get chopped down over and over again.
But like my high school economics teacher always said, markets are cyclical, so I might as well get in while it’s down than when it’s up. Sure enough, it’s gained significant ground since March and is back in the black again.
At 24, I’m pretty certain the market will tank again before I retire. As long as I stick to the plan I’ve laid out along the way, I expect my reaction will be the same: change nothing.
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I don’t have a lot of money in the stock market, so I left everything alone. We’re saving for a house right now, but once that’s done, we’ll begin investing more aggresively. But even when we’re investing significant (to us) amounts, I think I’d be more inclined to put my faith in the historical data and the advice from people like Buffet, especially because retirement is over 30 years away.
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I invested more, because after a big set back I needed to contribute more to keep my retirement goals on track! I increased my 401K contributions by 5% and continued to max out my Roth IRA. I bought almost all stocks and only sold to move some individual stocks into index funds. I also spread contributions to the Roth out over the year instead of putting in the full contribution in Jan as I had been doing. I was very happy with the Roth IRA contribution I made in March, I wish I had bought even more now. Staying in the market has saved me many thousands.
Today, I am actually much more concerned about buying bonds than stocks as the possibility of high inflation and a future increase in interest rates would really hurt the value of bonds.
-Rick Francis
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It made me take a look at both my 401k and IRA as everything was crashing and thats when I learned about dividends.
My 4 year old IRA through a mutual fund didn’t pass on the dividends to me so when everything crashed last fall I had less money than if I stuck it in a mattress. Likewise half of my 401k allocations were not.
I dumped my IRA and am doing it myself through sharebuilder and enjoying some DRIPs. At least now I am getting something for my time even when the share price goes down.
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I left things as they were and continued to contribute my usual amount at every paycheque. My plan automatically rebalances with every purchase, so my stock and bond value ratio stayed the same, even though I was obviously selling bonds and buying more stocks. But this is just something that happens without me having to take care of it myself. I did one lump sum in February to max out my RRSPs for the year.
I see investing like this: a man walking up the stairs who is playing with a yo-yo. The yo-yo goes up, and the yo-yo goes down, just like the markets do. I don’t pay any attention to the yo-yo though, because by the end of his walk up the stairs (30 years) he’s going to be at the top, no matter what the yo-yo did.
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I decreased the standing biweekly contributions by $50 each in May when my partner’s company gave all employees a choice between a 5% salary cut and a severance package. In July I increased the biweekly contribution by $100 each because I got a pay increase. So net up $50 over that time.
Because we are contributing on an ongoing basis (with changes in amounts, and the occasional lump sum), and we don’t have an easy way to see how much we have put it, we just track the worth of our investments overall. It generally goes up because we are making ongoing contributions that overshadow the market movements. Though Jan, Feb, Mar showed drops, July was back up to higher than we were in September 2008.
I guess I could have put in a lump sum amount when we saw the dip, but I decided that it was more important to conduct some repairs on the house. If you don’t keep on top of those you lose big time in the long run
Amusingly, when I called to increase the contribution, the company told me they had reevaluated the risk of the index fund I was in to be medium-high instead of just medium and reconfirmed that I was still comfortable with the allocation. I guess they had a lot of people calling up in panic when numbers started slipping.
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“I’ve no clue where the market will go next month. But I bet it’ll be up in 30 years.”
Those are words to live by, Mike.
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I contribute to my TSP (the gov’t employee equivalent of a 401K) but not much right now because I’m trying to build an emergency fund and pay graduate school tuition. So, I’m not very familiar with the stock market. Regardless, as I started to learn about what caused the crisis (reading, NPR, This American Life specials on it) I was disgusted. I take “voting with my dollars” seriously, do I really want my dollars supporting this system, where it seems there are people that just sit around thinking of schemes to make more and more money for the sake of making more and more money (the big example is mortgage backed securities). It just doesn’t seem right, my dad works everyday, producing goods, risking his life in a factory, but these people get gobs of money for pushing money around, and seemingly trying to make money for nothing?
I’m young, and maybe I just need to get over this idealism and maybe I’m completely misinformed, but I do know that when I start putting more money towards retirement, I will be thinking about green investing and microfinance so my money is working for more than myself and keeping my money away from the stock market giants even if it means I get less of a return.
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Like many others that have posted I got lucky because I realized the risk versus reward was in my favor. My current employer 401k plan has an ESOP that allows meto buy company stock. This stock is a financial industry stock which got hammered due to concerns over AIG and other large banks. My company was included in the mix but was much lower risk then the others as it had less derivative risk. So long story short I was able to move 100% of my 401k (only about 30% of my overall retirement plan) into my company stock at roughly $11 a share.
During the next 4 months it dropped to $6 a share but then went up $22 where I got 50% out and then up to $25 where I got the other 50% out. Please realize the book value of the company was $24 when I got in so there was rational that the stock was a value due to system wide concerns and not company concerns. Also I have 30+ years to retirement and made a calculated investment based on risk and rewards and my understanding the markets probably would go up in the next 6 to 12 months.
Now I am back to 80% S&P Tracking, 15% International, and 5% ESOP. I maintained my dollar cost averaging throughout the decline and maintained my deferral percentage even with taking a pay cut (company wide).
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Bought 2000 shares of Citigroup at $1 – this was my ‘swing for the fences’ investment. The $2000 I invested is now worth almost $9000!
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During this recession, I continued to invest $300 a month, while my investments are still down, I have been lucky to capture some extra shares when the hit their lows. I love investing!
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I have been contributing to my 401k to the max I get matched for, and have not changed that at all. If I didn’t have debt and childcare, I’d probably have increased it.
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Just goes to show that Dollar cost averaging over time is the simplest way to go. Trying to time the market only leads to tears. If your horizon is long-term, then short-term fluctuations should not affect your timing decisions.
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I did the same as you. March 12 I divested almost all my savings and bonds and put them into a index superfund (that’s my name for an indexed fund invested in multiple other indexed funds). I did this under the same principle you stated earlier, which is the lower the market goes, the more of my cash I throw at it. This has turned out very well for me (fingers crossed!). It is not easy to do though. It reminds me of instrument flying in that your senses tell you you are upside down, but you just have to ignore them and continue flying based on what the instruments are telling you. Not easy.
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In general my losses were about 40% and have recovered about that much, depending on where it is. But I am looking at my 401k funds, which were recommended by an advisor, and they’re underperforming the NASDAQ, S&P 500, and Dow Jones.
I hate looking at these and somehow still haven’t figured out how to allocate better. My plan is with ING Retirement; how do I figure out where to reallocate these to my advantage?
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I rebalanced a little and increased my 401k contribution. Bought a few DOW 30 stocks early March. Best buy BAC +139%.
I saw it as a one in a lifetime opportunity.
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My mom pulled everything out! Her investment advisor and I both told her that she was turning her paper losses into real losses, but she’s less than 10 years from retirement and losing her money made her ill to think about. I guess the one bit of good news is that she withdrew her money before some of the biggest losses, and now she’s probably got her money in more appropriate investments considering her risk tolerance and how close she is to retirement.
I have been much more lucky. I just opened a Roth last year, and this year I made my contributions toward the bottom of the market, so now my Roth is at $11,800+, with 10K of contributions. Only 40 more years of investing to go! As always, great article, JD!
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@hanna,
My 401k always seemed to outperform the S&P 500 during bad times… and underperform it now as things are doing well. My guess is that it is in too conservative a set of funds. And I’m only 30… it should probably be more aggressive.
I didn’t touch a thing through all this, and I’m a little sad. I have a 401k with a partial company match, and I just watched it ride the roller coaster. With the continued contributions, the rise of the market has pretty much erased my losses.
But the several thousand I have in the bank… I really thought in March – this is the bottom. Let’s get in. Sure you can’t time it every time, but I had a feeling and it turns out it was right. But I’ve yet to invest and never took the time to find an affordable “in”. Where do I go? Scottrade? e-trade? Which funds aren’t going to cost me a ton in trade fees and other fees? I just can’t figure it out. With only a few thousand to invest, paying $10 or more for each transaction could take away half of my investment gain! Can I just buy one big set of index funds for a single $7 trade fee? Do I have to pay $20/month just to have an account with one of these companies?
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We stayed on track since we have 25+ years until we need the money in our retirement accounts (I’m 34, wife is 28). I’ve enjoyed the nice run-up, but deep down I think it will probably be short lived. I have no reason for this other than my gut feeling. (I had a similar feeling last summer and almost converted much of my 401(k) to cash….almost.)
I just rebalanced our portfolio earlier this week. Now I’m wondering if I should sell a couple individual stocks I’ve made about 20% on in the last couple months or continue to hold them. I’ll probably just hold them since that part of my portfolio is yielding nearly 7%.
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My dad turned 60 last July, and he took most of his retirement out around then, and used it to keep the mortgage on the house he built to a minimum. He’s never been one for debt. In fact, other than a mortgage, he’s never had any debt. So he always pays off his mortgage as fast as possible. Since he got out before July, he didn’t lose much at all. (And in my area, home prices stayed pretty steady.)
My step mom, though, has a retirement fund that seems to be a bit on the aggressive side, mostly in stocks, and she lost a whole lot… on paper. I haven’t heard if she decided to stick it out or try to pull all that money out… at the worst possible time.
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I CAUTION anybody who is putting new money to work right now with the stock market up 50% from it’s lows. Beware of the double dip and months of September and October.
Eventually, the 10%+ unemploymentt will catch up to you. I actually feel very bad for anybody who is tricked to buy the stock market today. Don’t chase!
Best,
Shogun
Slicing Through Money’s Mysteries
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Wow, I just read all the comments, and it looks like EVERYBODY has made a ton of money and did the right thing. Could it be? Yes it can.
So perhaps this is a good example of the entire America where nobody pulled out, and everybody put more money to work in the downturn and came back strong.
If this is the case, then who cares about the 10% who is unemployed, as 90% are making big bucks in the upswing, and the 10% who are unemployed also made wise investment decisions.
I’m being facetious here, but perhaps not. Consumer confidence should ramp, driving consumption growth if GRS is a proper sample set of America.
Ok, I will boast too. I bought about $85,000 worth of specific financial stocks in mid February, and they are currently worth $160,000 now. But, I do admit that my 401k is still down 25% from the peak! Darnit. Still, time to buy a new LCD TV as well as a nice vacation home somewhere in America
Best,
Shogun
Slicing Through Money’s Mysteries
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Whereas most people are doing themselves a disservice by worrying too much and paying too much attention, I’m paying too little attention most likely.
I dunno…when that money goes into those accounts…I just assume its gone. I can’t get it back until I’m too old to care. But I believe in the market so I just keep investing. I figure it will all work out in my favor in the end…so I stick to solid prinicples:
Dollar cost averaging
Asset reallocation every 6-12 months
Index funds
Diversification
Its worked for decades, I’m not afraid it will work for me, no matter how the economy goes. I’m too busy having fun and working to be worried about daily/monthly/yearly fluctuations in the market.
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We are young so we are buying!!
It was sad to hear someone recently who is about 3 years away from retirement saying how she lost so much and is pulling most of it out. And then when it goes back up she will put it back in. How crazy is that!!??
I guess I don’t understand how someone 5 years from retirement has so much still invested in stocks.
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And I’m glad I did!
When the sub-prime crisis came to a head, the S&P came tumbling down. As soon as Jim Cramer said “get out of the stock market!” I started looking to get back in. When a bull like that is panicked and sweaty, you’ve pretty nearly hit rock bottom.
After years of wasting time an energy on mutual funds, I’ve realized the benefits of straight-up index funds, and focused my investments their.
The stock market is a fine place for your nest egg… just as long as you follow the rule: “have your age in bonds.” If your retirement savings got wiped out, you probably didn’t follow this rule. I keep reading about folks in their 60s who had 95% of their retirements in stocks. Of course you’re going to be wiped out! That’s the portfolio of a 5-year old!
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Being young, I aggressively entered the market during the downturn, buying stocks in undervalued companies I knew something about. I already had maxed out my 401K, 529, and IRA contributions, and I change no allocations or automatic investments in those.
I saw my portfolio shrink dramatically, but I entered the market. Today, YoY I’m up around 10%. Not bad.
To Tracy: You’re going to have to get over your “the system is rotten” mentality as your propsed retirement route is very, very risky. Just do what nearly all GRS folks do, buy some index funds from Vanguard or Fidelity, and move on with life.
To Shogun: I expect the market to decline or stagnate. That’s a given. But if you’re looking at unemployment as if its a leading indicator, which in pretty much every downturn its a lagging indicator. Unemployment isn’t the variable of interest right now, if you’re wanting to evaluate how the economy is going to be a year from now. Don’t use a lagging indicator to predict the future!
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My wife and I had been putting all our savings into an ING savings account the last 18 months. That was until late November when the market hit its lowest point (at the time), and I decided to finally get off the side line (all our investing at this point had been in our employer sponsored 401k’s).
I put a “chunk” of money (for two 27 yr olds) into two Vanguard index funds (Total Stock Market and 500 Index) and have been automatically investing ever since. Wish I had a taken another chunk out of our ING savings in March, but I was “hoping” the DOW would get below 6,000. Oh well, I’ve seen a 22% return on the whole portfolio since November.
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In June of 2009 I rebalanced to a more conservative allocation (20% more in “G” fund). At that time I also reduced by 2% by contributions, simply because my focus for the next year or two is to build my emergency fund to the appropriate level. After that I plan to increase by contribution to their original level.
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Around November, I increased the amount I’m saving in my 401(k) from 15% to 20% and then (this was the key part) I totally stopped looking at statements and tracking my investments. While some might say that this was dumb, I knew my money was in good investments but if I’d kept watching my accounts take a nose-dive, I’d have been really, really tempted to make changes. I finally looked at them the other day and, well, I’m happy I did what I did. I’m obviously not where I’d be if there’d been no recession, but for someone who is 30+ years from retirement, I’m sitting fairly pretty.
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It was just this year that I really started putting money into my Roth IRA on a regular basis. It had nothing to do with the market, I just suddenly realized that I needed to put more away for retirement.
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Well, I started investing in April. I’m in my early 20s and saw that the stock market was going to turn. I put in $10,000 into a Roth IRA for my 2008 and 2009 contributions before April 15th. I still wanted to be conservative so I wrote covered calls on all my stocks for a month out. I invested about 70% each month and kept 30% in cash. I shot to improve my balance each month by 6%. (6% each month!!!) Instead I got around 4%. Last month I picked some dogs and only made 1%…but annualized that’s 12% a year. Well I’m up 20% since April. (4 months) And I did this by being a lot more conservative than just putting it in stocks. Using covered calls reduces volatility by a lot and also allows you to realize gains each month instead of guessing when to sell.
Just a thought!
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While I appreciate their concern, I don’t share their skepticism. I’m not convinced the market is broken.
The market is absolutely broken. We need to tear down the investing model that has become dominant (Passive Investing) and start the rebuilding process from scratch.
I put a post to the Motley Fool boards on May 13, 2002 showing that the retirement studies that 90 percent of financial planners use to tell us how to prepare for retirement get the numbers wildly wrong (they fail to account for the effect of valuations, the single biggest factor affecting whether a retirement plans succeeds or falls). Numerous big-name experts have in the time since acknowledged that I was right. Yet not one of the studies has been corrected. And none of the “experts” who are aware that the retirement studies are in error has been willing to help me publicize the problem and thereby help the millions of middle-class people who will be suffering busted retirements in days to come if they are not promptly informed of the realities.
The problem is that the academics once believed in something called the Efficient Market Theory. The entire Passive Investing model is built on a belief in this theory. The academic research has been showing since 1981 that the theory is in error. But The Stock-Selling Industry has spent hundreds of millions promoting Passive Investing and now does not want to acknowledge that the entire thing has been revealed to be a huge mistake.
We need serious people to step forward and take serious steps before the U.S. economy goes over a cliff. We have imposed on middle-class workers the responsibility to finance their own retirements. We now need to provide them a means of obtaining accurate information about what the historical stock-return data says about what works. It ain’t Passive Investing.
Rob
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Great post. I didn’t panic when it came to my 401K – as I continue to invest in the ups and downs. However, I did have a similar “oh no” feeling when consolidating all my old 401K’s into an IRA. I probably did it at the wrong time and I have never bothered to go back and calculate any gains / losses for doing so. I sleep well knowing that I only need the money in 30 years. But I did have that feeling that I was transfering the money at the wrong time. Emotions vs. facts…something that us regular folks struggle with when investing!
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My reasoning for this is that ever since the dollar has been taken off the gold standard, the dollar doesn’t have any real value. So just as a precaution with extra money, I bought some gold pieces. I’m also putting together an emergency pack too. I know this sounds crazy and I’m not a conspiracy theorist, but I believe (as other economists), that the economy almost had a huge meltdown. So, it is possible. We’ve had it good for too long. Societies and governments do collapse. Never in history has one not. It’s just a matter of when.
I know that it probably won’t happen in my lifetime or the lifetime of my children or grandchildren. I just want to be prepared if something does. I visited Argentina after December 2001 twice. That just goes to show you that it is possible. Always be prepared, but live life first.
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I started investing in late October of last year. Not because I thought the market was at its low and it was a good time to start investing but because that was when I had enough money to open a brokerage account. I’d like to say it was my investing skill that caused me to invest almost right at the bottom of the market but it was just luck.
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We kept our investments where they were and increased our contributions starting in January.
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I’m one who wished I had any money to put into the markets this past year!
I’m still paying down debt.
I did switch jobs in February, and I got a little raise over my last job, so at that time I decided to put part of the raise toward mutual funds and part toward debt reduction, instead of throwing it all against my debt.
I know it’s technically “wrong” to try investing when you’re still in debt, but it makes me feel better; like I’m doing “something” more than “nothing”. Silly I guess, but it works for me, especially since I’m still putting extra toward paying off all of my debt.
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