Category Archives: Investing

Vanguard Woes

Ok, I know mutual funds are rather safe when it comes to an investment, but I’m really bothered that my $8500 invested in a Roth IRA and index fund has turned into about $8338 over the course of two weeks. I know I have to deal with fluctuations in the market, but it’s no fun to lose over $100 in two weeks. The only thing that keeps me from pulling my money out is knowing that if it lost $100 in two weeks, then it certainly could gain $100 in a similar time span. But that’s not really the point of investing. I’m supposed to be making money, not watch it all sink down the drain. Maybe my investments are bad. Or maybe the market just isn’t doing good for the time being. At what point should I be worried about my investments? When my $8500 is $6000?

Vanguard Mid-Cap Growth Index Fund Investor
Shares 180.505
$24.56 –$0.14 *$4,433.20
Subtotal $4,433.20 (Bought for $4,500)

Vanguard Target Retirement 2050 Fund
$24.06 –$0.07 $3,955.61
Subtotal $3,955.61 (bought for $4,000)

Bye, Bye Capital Gains

My Vanguard ROTH IRA and Mutual Fund accounts are back up and running. Well, I shouldn’t say “back up and running” given the first purchases all were bounced back and all of the capital gains on these funds were lost. Of course, now that I reinvested my money, the funds are down and I’m losing money. I know not to stress out about this, of course, but it was so nice to see my money gain $50 in the first week as opposed to losing the money.

This time around, I decided to be a little bit more risky in my investment. I put the full $4000 into my Roth IRA (I was going to do $3000, but with my new job also lacking a 401k plan… but with a higher salary… there really is no reason not to max out my Roth IRA) and then I put $4500 into the mid cap growth index fund. In a month or so I might diversify a bit and take $1500 of that and add another $1500 to a large cap fund.

One day, when conflict of interest is not an issue (if that’s ever the case) I’d like to get into stock trading on Zecco. It sounds like a good place to start out. But for now, I can’t get too deep into the Wall Street world.

Too Good to be True?

I understand that mutual funds are fickle, but I’m still rather excited by the fact that my $3000 has made $31.28 in just two days. It’ll probably drop down again sometime soon, so I’m not sure how much weight to put on that $31.28 cent gain. Still, that’s pretty cool… to think, it’s possible to make an extra $15 a day. That’s enough for lunch!

Meanwhile, my Roth IRA has gone up $18.40. So I’m up $49.68 in two days. That’s not bad, is it? I wonder how long until my accounts are at less than what I started with.

I’m still confused about the CD I tried to open online. It was that $5000 one at 5.01%. BoA called me but I still haven’t gotten back to them. And, as I noted before, I tried to take of the matter with a real person at an actual banking center, but because I bought the CD online I can only ask my questions to online banking reps via the phone. I’m kind of hoping something went wrong with it and it didn’t go through. That way I can take that $5000 and put it into another mutual fund, perhaps a large cap one. Or maybe I’ll be risky (stupid?) and put more in my VMGIX fund.

One thing I don’t get is if mutual funds work like the stock market. For instance, is it best to “buy” when the price is low for each fund share? Or does it matter less because you’re buying pieces of a bunch of stocks as opposed to just one stock?

I wish my bank would process transfers faster. It gets confusing when it looks like my checking account has $14k in it but really I know $6k of that was moved to the IRA & mutual fund and $5k of that is supposedly tied up in a CD that may or may not exist.

Off on a tangent, it’s quite exciting that I’ve gotten so many comments on my blog in the past day. One person who reads my other blogs actually figured out who I am! I don’t really care much if people who know me read this, but I guess I’m partially ashamed of being such a spoiled brat with my cushion of savings in the bank, and I feel awful that I don’t have student loans to pay while plenty of my friends do.

Then again, I also have friends whose parents will gladly put them through grad school and I know that, while my dad would help out here and there, I’m on my own when it comes to any higher education. Or am I? Well, my father says he can access his 401k funds in about 3 and a half years. It seems like he’s hinting at the fact that at that point he’ll be able to help out with money a bit more.

A part of me wants nothing to do with his money right now. I’ve already received more than I desire, and I feel guilty about that. But there’s also reality, and how I’m likely going to be making a “normal” salary for the foreseeable future. My $24k in savings doesn’t seem like much when I figure plenty of my peers are making $50k or $60k per year. Give them two years or less and already we’re on an equal playing field. So how guilty can I let myself feel, really?

CD Crazy.

Since I’m risk-adverse and I get all wide-eyed and bushy tailed at the thought of a high-rate CD, I pulled out $5000 from my “Maximizer” checking account and put it into a 4.26% 11-month risk-free CD at the bank. Of course I went to the bank to deposit my paycheck, but how could I say no to an 11-month “risk-free” CD? Well, supposedly I can take out money once a week with no penalties, and all I have to do is go to the bank. I figure the harder it is to get to my money, the less likely I’ll spend it.

I considered pulling my $7,400 from my crappy CD and putting it into the new one, but it turns out that the penalty to take it out (about $100) would be just about as much as the extra cash I’d make if I moved it to the slightly higher-rate CD.

So, gee, now I have three CDs. Is that crazy? The one I signed up for online hasn’t gone through yet. I still need to call the bank. It’s really frustrating that the online version of my bank and the in-person version don’t really talk to each other, with the exception of sharing my account information. I just wanted to sign any documents needed for the CD to be set up, but I can’t do that at the bank. I have to call them and deal with the automated system. Oh what fun.

PF Jitters

My $6000 was officially transferred from the safety of my Maximizer checking account into my IRA and Mutual Fund investment accounts. I’m excited about taking the investment leap myself, but nervous as all hell that the leap might be futile, or worse. I’m pretty comfortable with the $3000 I put to my Roth IRA. It’s in a nice Retirement 2050 plan that’s already diversified with my retirement date in mind. And since Vanguard seems to be a pretty reputable company, I’m not too worried. However, the $3000 I put towards that Mid-Cap Growth Index Fund is probably a bad idea.

As of 10:25am, my $3000 in my mutual fund is down 5 cents, and my $3000 in my IRA is up 3 cents. Why is a 2-cent loss making me so god-damn nervous? And furthermore, why is my Mutual Fund down 5 cents when looking at the day’s activity in the fund, it should be up a bit? I’m rather confused right now. Maybe it dropped down the second I put my money in. I know I’m going to be anal about checking how the fund is doing, despite that I’m going to try to force myself to keep my money in there for a few years (until grad school) unless someone more knowledgeable than me advises me otherwise.

I’m kind of glad I’m prohibited from getting involved in the nitty gritty of stock trading (due to covering technology companies that I’d like want to invest in), so I’ll likely avoid making any major investment mistakes. Still, putting $3000 in an account that could drop down to $2000 in a few days makes me rather nervous. I mean, the largest investment I’ve ever made with my money thus far was that godawful CD with a 3.1 % interest rate. I put $7000 into that a few months after I got out of college. It seemed like the wise thing to do at the time. It was an 18-month CD, and I figured since I had upwards of $30k in savings somehow, I could spare $7000 for such a “risky” investment. Well, it felt risky at the time.

Sadly enough, I didn’t bother to call my bank when the CD matured, thinking that it would just automatically transfer to my checking or savings account and I could deal with it then. Of course, now I know that CD’s automatically reinvest themselves at the same rate, for the same amount of time. So now I have my $7000 (which is at about $7400 after gaining the 18 months of Interest, which I guess is better than nothing) tied up in this low-interest CD. Meanwhile I recently saw an ad on Bank of America for an 8-month 5.01 % CD and I threw $5000 at that. For some reason they haven’t processed my CD investment yet, though. I guess I have to call them and confirm some things before they can pull my money from my checking account and put it in the CD.

In more exciting news, since last weekend I’ve made $1.57 since enrolling in BankofAmerica’s “Keep the Change” program. It’s kind of neat – every time you use your debit card, they roll your spending cost up to the nearest dollar and deposit the difference in your bank account. So, for instance, if you spend $1.01, they’ll toss in 99 cents. Of course, most purchases end up being, like, $2.92, so in that case you only get 8 cents. But over the course of one week and eight transactions, I’ve afforded myself a small coffee. I also apparently racked up $2.46 in my AdSense account somehow. I guess that means people are actually reading my page. That’s exciting! Extra income, even $4 a week, is certainly helpful. I’m nervous about this AdSense account thing, though. I’ve read some horror stories about how Google has shut down accounts if you click on your own links. And it’s not like I’m going to do it on purpose, but sometimes I’m not thinking and I’m actually interested in an advertisement shown on my page. I’ve never had to restrict myself from clicking something. So hopefully I can restrain myself.

On another note, I’m saving some money this month because I’ve offered a friend who’s recently moved to the area a place to crash until she finds a place. I wasn’t going to make her pay anything, but since she offered I figured I’d split my rent and pro-rate it. So that comes out to $15 a day. And I’m also possibly designing some websites for my friends for a rather small fee (compared to my normal rate.) But I never count my freelance money as income. It’s always “extra,” although in actually due to my poor spending habits and inability to keep a budget, I’m lucky if my freelance wages cover all the cash I’ve spent in a month.

So salary-wise, make about $2200 a month after taxes. (Though this year I ended up owing a lot in taxes and I haven’t done anything with the W4, so I’m figuring I make about $2100 a month, really. $905 of that goes to rent & utilities (PG&E, water, trash, etc are “included” in my rent). Oh, what the hell, here’s a list of my basic fixed monthly costs:

$905 — Rent (includes utilities) – Going up to $1050 per month in July, plus requiring renter’s insurance.
$60 – Verizon Cell Phone Bill, if I remember to pay it on time and don’t use 411, etc.
$64 – RCN TV & Internet
$8 – the converter box from RCN that I’ve yet to find time to return, that I’m apparently “renting” on a monthly basis
$5 – RCN “Home networking” – on my RCN bill, but I have no idea what this is. WTF?
——————————
$1038 total for now
$1188 + whatever rent’s insurance costs in July.

Now, time for some depressing figures…

My spending on rent currently is 45 percent of my income (you’re only supposed to spend 20-30 percent of your income on rent, I hear.) In July, sans a raise (and I doubt I’m getting a raise anytime soon) I’ll be spending 50 percent (or more) of my income on rent.

It doesn’t take a personal finance blogger to tell me that’s a terrible idea.

I’ve been thinking about writing a post about why on earth I live alone in the SF Bay Area on $35k a year, so I think I’ll write that up over my lunch break later this afternoon.

In any case, with $1050 left for all the other things in life outside of basic housing, TV, Internet and phone, I just keep overspending. It doesn’t help matters that I’m spending upwards of $350 a month in gas to get to my various rehearsals that are 40 or so miles from my home (my “hobby” is doing community theater – which is free, outside of gas mileage and makeup for shows and the like.)

But hey, at least I made $1.57 in “keep the cents” change. Then again, Bank of America, for some reason, has that $1.57 noted as a “spend” in my checking account. So I’m down $1.57 for the time being. What’s up with that? Grr.

Diversification?


This isn’t my first blog, nor will it be my last likely, but after randomly falling into the online investment blogging community, I decided it’s a good idea to start tracking my finances and the like via the Internet… anonymously, of course.

So here’s a little bit of info about me to get started: I’m a young professional in her early 20’s. I’ve been out of undergrad for two years now. My income is $35k a year, benefits included, except sans a 401k. Chance of raise/promotion within next year: 15%. Chance of company going out of business: 55%.

I’m fortunate in the sense that I have a decent amount of savings and no college loans. Savings from both my dad putting aside some funds for me for the awkward post-college year, and then extra cash from a lawsuit over a broken arm when I was little. My networth right now is around $27k. So I realize I’m better off than many other people my age, despite the fact that they might be making $50k a year and I’m only at $35k. Or at least our actual income after bills and other expenses is usually about the same.

Since this is an anonymous blog, I feel ok talking about the details of my finances. I haven’t talked about it much on my main blog since it feels weird letting people know about how much I’m worth, or not worth. But finances are one of the things that I really need to talk somewhat publicly about, since I’m unsure of how to handle my money, with the exception of spending it. I’m very good at spending it.

So I recently opened a few random mutual fund/IRA/CD accounts, as I’m attempting to “diversify” my portfolio. I know I’m supposed to be living under my means, but I often fail to do that and spend more per month than I take in. Obviously that’s a bad idea. But i’m hoping that at the least, putting some of my funds in high-interest accounts will balance out my poor spending habits.

Ok, so here’s the breakdown of my accounts right now… (I’m going to try to keep tabs of this, as well as my budget, on here)

$2,143.54 – Checking
$7,421.99 – CD – 3.1 % Interest, matures 8/28/08
$5,510.58 – Maximizer Checking
$1000.63 – Savings
$5,000 – 8-month 5.01% Interest CD
$3,000 – Vanguard Mid-Cap Growth Index Mutual Fund
$3,000 – Roth IRA, in 2050 Retirement Plan fund

Well, the last three of these items haven’t officially been started yet. I signed up for them yesterday. I’m waiting for all of the electronic transfers to go through. I realize investing in a Mid-Cap Growth Index Mutual Fund. Afterall, the smart thing to do is to invest in large caps, right? But I figure if I put $3000 into a mid cap fund, I can also invest in a large cap fund if/when I ever get a raise. I’m $1000 to maxing out my Roth IRA fund.

I don’t understand the Roth versus regular IRA option, being as I know the Roth is all after-tax income and the regular IRA is pre-tax income then invested. But what should I be investing in now? I’m only making $35k a year, so it seems like I’ll most likely be in a higher tax bracket when I want to retire. Afterall, I plan on making more than $35k per year when I’m 55 or 65 or whatever age it is I can retire.

And if I sign up for a Roth IRA now, can I move to a regular IRA at any time? Or am I stuck in the Roth?

Finally, how about my mutual funds – how much will it cost to change them from mid-cap to large-cap if suddenly I realize I ought to be a bit less risky in my investing? Gosh, I’m so confused.