Category Archives: Investing

You Can’t Scoff at Deal or No Deal if you Play the Stock Market

Have you ever watched Deal or No Deal? If so, how frustrated do you get when the contestant is offered a really good amount from the banker and then the contestant goes on to play against the odds and ends up with a measly ten bucks?

Watching the show it’s easy to think, gee, this person is an idiot. But how different is that from playing the stock market?

Of course, stocks have a lot more math to them. The odds aren’t so clear cut. Each company has its own risks and it’s own potential for success.

But when it comes down to it, you either believe in a company or you don’t. You believe that in box #1 there is a goldmine and you stick to your gut or you change your mind and hope you’re right.

Obviously you can’t control the stock market, but I never realized just how vulnerable it (and the American dollar) was until recently with this huge recession going on.

I can’t figure out if my stock investments are bad choices or if the recession will just have to work through my piggy bank before my stocks can start growing, and hopefully returning to their investment value and exceeding it. Still, I have my doubts I’ll see that money again.

As I’ve said earlier, my Sharebuilder account is where I can play the stock market for the long term. I’m not day trading… which maybe is a bad thing, given the recent performance of my GLD holding. It was up to over $100 a share just a day ago and now it’s down to $93 a share. My $49 profit has widdled away to $6, and I wouldn’t be surprised if it goes negative soon either.

Meanwhile, all of my other funds are performing miserably. One of the other reasons I started my Sharebuilder account is to diversify my portfolio internationally. I’ve got random bits of stock in Brazil, India and the rest of Asia (coal and cleantech stocks) — all ETFs. I’m hoping that if the US crashes and burns maybe these other economies will survive and even grow. I believe that the future for the US economy may not be so bright. China and Asia are gaining power by the millisecond. I can’t imagine that the US will be able to keep up. I think over the next century the US is going to lose some of its superpowers, for better or worse. I believe there’s going to be a big war at some point down the road that’s going to hit all of the world’s economies much worse than the Iraq war. There will probably be more attacks on America, and there will be a third world war. I just don’t see how it’s possible to avoid it. Scary, but I think it’s probably true.

Of course war times, historically, are usually good for the economy, right? Well, except this Iraq war doesn’t seem to be living up to that. So I don’t know. I can’t really guess the future, but the way the world is right now, and the way people are so stupid and stubborn and violent, I can’t see us avoiding some huge conflict for much longer.

I’m not sure how that will effect my stocks. If I survive through such a war… maybe a diversified portfolio will be a good thing to have?

Concerning My Expenses… and the Stock Market

I’ve charged about $500 in expenses for the show I’m currently working on, and while I’ll get all that money back, I’m now a little worried how I’m going to pay for all of it. I’ve moved so much of my money into stocks and such (which, of course, are performing awfully) that I have little in my checking account. I get paid sometime at the end of the month and I’m actually owed a lot of money right now for invoices I haven’t filed yet, so I’m not really concerned about the end result of my expenses balancing out, but for time being I have a credit card statement due that needs to be paid off, like, next week.

What to do, what to do.

In other financial news, I’m starting to really feel the hit of the stock market. Mostly I just picked a few bad stocks on the first day I signed up for Sharebuilder (bought 4 shares of one for $26 and now it’s down to a measly $11). I could sell that stock and buy something else with the money but it seems like a waste to sell $40 worth of stock with a $9 fee. If anything, it’s worth $30 to wait it out and see if one day that stock will go up again. Or if the company will go out of business and it will be worth nothing.

While that specific stock has cost me the most in my Sharebuilder account so far, I’m still down $73 dollars. Not so bad, I guess, compared to my Vanguard accounts which are now down hundreds. Thousands even. I can barely bare to look at them.

I’ve been keeping detailed track of my investments and every single account for the past month. I record it all in a google docs spreadsheet every three days. So this way I can see what my stocks are actually doing. It’s a little hard to track them because I invest in them every other week, so it’s hard to tell if they went up or if I just put more money into them.

I’m trying to continue investing with the “stocks are on sale now” mentality but it’s getting tough. Losing money is not my forte.

I’ll hang in there, though. Or at least I’ll try, in hopes that one day when the economy booms again, so will my stocks and index funds.

In the meantime, my GLD ETF is performing very well. I’m sad I didn’t buy more of it the first day I decided to start purchasing stocks. Still, I fear that I won’t get out of GLD at the right time and I’ll end up losing all my gains.

A few weeks ago I wrote how my GLD was up $29 and someone said that I should just sell it now, the $24 gain was good enough. But now it’s up $47 so I’m glad I didn’t sell. The way the economy is looking, it’s probably good to hold onto it for a while. It’s the only ETF/stock in my Sharebuilder account that’s actually making money. It helps balance the blows of everything else. Luckily it’s also the largest percentage of my Sharebuilder portfolio. So that’s why I’m only down $73. But given the trends in the stock market, I have a feeling I’ll be down much more.

The good news is that my Prosper accounts are doing well. I’m getting an average 8% return on them. I only have $200 in Prosper (and one $50 bid out) but it’s nice that my borrowers are paying me back on time thus far. It also feels like a nice cushion to the sagging stock market. But I know that one defaulted borrower would put me back $50, and more than one would make the whole P2P lending “benefits” worthless. Less than worthless. You know?

So where does that leave me? Like everyone else who is invested in anything, my finances are suffering right now. I feel like this is a great opportunity to throw money at the stock market (or at least at low-cost index funds and maybe some quality stocks now “on sale”) but gosh, it’s really hard to put money in knowing that I’m going to lose a lot in the meantime.

I mean my Vanguard total stock fund should have $5200 in it, but instead it has about $4500 or something. I can’t even check anymore. It’s too painful.

What to do about GLD?

A few months ago when I dove into the market with idealism and ignorance, I wanted in on all this gold excitement in the market. I believe the market is tanking, a recession is inevitable (if not already happening) and gold will do well for a while. I believe, and largely still believe the hype.

However, what I didn’t realize at the time (damn me for not reading the prospectus or understanding tax law) is that GLD, being as it actually means I hold a small tiny piece of actual gold, is considered a collectible by the IRS.

Why does that matter?

Well, normal long term capital gains are apparently taxed at 15 percent, which is actually pretty nice given that you can make a lot of money in the stock market, and as long as you hold your stocks for a year you only have to pay the 15 percent tax.

However, GLD, the “collectible,” is taxed at a rate of 28 %.


So now I’m trying to figure out what to do with the GLD stock in my Sharebuilder account.

I understand the long term capital gain tax, but I’m still unclear what the gains would be taxed at if I cashed out in less than a year. I’ll probably want to do that anyway given that gold’s price will hit the roof at some point, the dollar will recover with the new president coming in (hopefully) and I can sell off the gold.

But what rate will GLD be taxed at if I sell it within a year?

Also, I’m buying it about once a month in smallish increments. Right now I own about $470, or a little less than 5 shares of GLD. As of today, the account has a net profit of $34. To sell it, though, would cost $10. So if I sell today, I made $24. But that $24 will be taxed. What rate would it be taxed at?

When it comes to long term capital gains, is the “one year” policy based on when you bought each share? What if I bought a part of a share per month? When can I sell to get the long term capital gains tax instead of the short term tax? And would I want to wait or sell sooner for my GLD holdings?

Can someone explain this to me…?

Ashes, Ashes, Her Finances Go Down

The stock market is still performing poorly. I went ahead and bought $100 more dollars worth of my mutual fund, because I’m upset that I’ve lost $400 and I figure if I buy more now, when the the fund is cheap, maybe I’ll make my money back. At least my CDs that are making interest have made about $400 total over the last two and a half years, so, I’m at break even, for now.

I’m not too concerned about my Roth IRA. It kind of sucks to watch my Roth depleting. That’s going to have quite some time to recover. Afterall, I’m only 23. The mutual fund is really worrying me, and it probably should be. As I’ve written before, I’m not going to pull my funds out right now. I’m keeping them in for a while. A few years probably. I have other money not tied up in investments so I’m doing fine financially. It’s just it’s really upsetting to think that there’s a possibility the $9100 dollars I now have tied up in mutual funds — $4000 in my Roth and $4600 in my index fund buy – will be down to… much less than that the day I decide I want to buy a house or take a year off of life and become a reclusive writer traveling the world.

In happier financial news, my freelance career is sort of, kind of taking off. Thanks to my uncle, who hooked me up with some folks who needed writing help, I managed to make about $300 extra this month. That’s really nice, considering I’ve spent about that much to get to and from my show and work in gas and that lovely $170 car key incident.

I’m also excited about getting my first paycheck for my new job tomorrow. I’m not sure how much my check will be after taxes are taken out, but I know I’ll be making more than I was the last time I was taking home money. And my new company even has direct deposit, so I don’t have to deal with going to the bank twice a month. I hate going to the bank.

Really what I need to focus on is doing good work at my job. I’m trying, I really am, but my new position is pretty hard. And I love the challenge, but I’m terrified of failure. I’m even more terrified of failure because I’m not really sure what it’s defined as in a job like this. There’s no way to quantify what a good job means. Obviously if everything I do is great and gets a lot of positive feedback from the blogosphere, I deserve a pat on the back. But otherwise? I don’t need constant praise or criticism but once in a while it’s nice to know where I stand – especially when I’m so new at something. I do hope I’ll get better. I like that my company does offer a bonus incentive to work towards. That’s certainly not the reason to do a good job, as really, the reason to do a good job is the reward of knowing that I’m contributing something to a larger conversation… but, the extra cash incentive doesn’t hurt.

The Markets Are Doing Crappy, eh?

I watched my money in my Vanguard account gain about $300 and then lose $400 in the past month. Today was the worst. It was apparently the worst day on the stock market since Sept 11. Oy. Maybe I picked the wrong time to start investing.

“Worries that have been out there for the past couple of years are coming to a head right now,” said investment strategist Edward Yardeni, president of Yardeni Research Inc., told the Associated Press. “It’s show time.”

Show time?!? Um. Should I be worried?

While I’m starting to be ok with the fluctuations in the markets, it’s STILL tough to lose money. I’d prefer to make money first, and then if I end up losing what I made through my investments, that’s fine. I just don’t like being under what I put in. And right now I put in $5000 into my mutual fund and $4000 into my Roth IRA. And now I’m at $8839.20. I realize that tomorrow that might be at $9010, or it might be at $7000. I’m a little nervous. This is kind of a test, I guess. But I really ought to balance out my investments a bit better. The rest of my cash is stored safely in low-interest CDs. Watching my investment turn from $9000 to $9300 was really exciting. But that excitement was short lived. I’m trying really hard to stick it out a year. I’m hoping that my money will have, um, made money by June 2008.

Investment Advice From Y’all…

I received quite a few comments on my last post regarding my freaking out about losing $100+ on my Roth IRA and mutual fund investments. Thanks to goldnsilver,, glenn, savingdiva, wanda, and hazygrey (and “anonymous”) for your words of wisdom. Here are some highlights from the comments, and my responses…

hazygrey said…

“This is your IRA – you shouldn’t be pulling out money for 40 years. Don’t worry about it and leave it for now. I know it’s easier said than done. Also remember that there have been double digit gains in the stock market for several years now, and a correction or crash could happen soon. When that happens, don’t panic and don’t touch the money!”

response: I’m less concerned about my Roth IRA and more concerned about my mutual fund investment. I’m terribly confused about what I should be investing in with my “extra” savings right now. I have $12,000+ tied up in average-rate CDs, which I consider my stable, low-risk investment. Then I decided to be somewhat(?) risky and put $4,500 into the Vanguard Mid Cap Growth Index Fund. While the thought of losing that $4,500 isn’t exactly one of a happy sentiment, I could deal with losing the money. I don’t want to lose the money. That $4,500 might be a long term investment. I’m only 23 now, so I’m hoping I’ll make enough money in the coming years to keep at least $5000 away in a long-term, non-IRA investment account. But I also would like to save for a house and/or grad school. I’m not sure if that’s a year out or ten years out. My life is rather in flux right now. Therefore it’s hard to plan financially. My Roth IRA is fine. It’s in the 2050 retirement account for a reason. I don’t plan on touching it until then.

Wanda said…

Don’t look at your investments every day or even every couple of weeks. Unless you are a day trader, there’s no reason to. …If a 2050 fund & a mid-cap makes you sick at night, then it’s not the investment for you. Like goldnsilver said, pick something that pass the stomach test. Pick something with 20% bonds. You’ll have less risk (of losing your money), but you’ll be giving up the rewards (or potentially larger returns).

So what’s the difference between “bonds,” “money market funds,” and “CDs.” I get the index fund versus stock thing, but beyond that I’m lost. Is a CD a bond?

Anonymous said…

How much do need the money in the other [non roth] account? Were you depending on a quick gain to pay the rent this month? If not, give it atleast a year. These are supposed to be long term investments, not quick capital gains.

I’ll gladly leave my money in the mutual fund account for a year or more. I just don’t want to be losing $100 a week on this account. I guess that’s unlikely, but looking at the performance thus far I’m just a tad bit nervous.

SavingDiva said…

I understand your frustruation with your loss. I don’t like to lose any money. I’ve had to stop checking my retirement accounts every day because of market fluctuations causing fluctuations in my blood pressure! 🙂

Thanks for understanding. I probably should stop checking my accounts every day as well. I’m sure I’ll be fine once my account starts to grow past my initial investment. It’s just now I’m down $100. And that’s not a good feeling.

Glenn said…

Take a step back and look at the big picture. If you are young and you will not need the funds for over 10 years don’t panic. You will be adding to your investments over time. If they funds are still lower when you make your next investment, you will be buying the same companies at a lower price. When you go shopping would you rather buy the same product at a lower price or a higher price? The same goes for mutual funds and stocks.

Good points indeed. As I noted above, my Roth IRA fund is for 2050. But the mutual fund account could be needed sooner. In 10 years I’ll be 33 years old. I have absolutely no idea what my life will look like at 33. Maybe I’ll already have kids. Maybe I’ll have decided kids aren’t for me. It’s just so hard to plan when I can’t figure out when I’m going to need this money. I’d like to invest so I can obtain enough cash for grad school in a few years. Or at least so I don’t have to take out tons of loans, I really like the idea of paying up front for as much as possible. But it’s also likely that I’ll never go to grad school. How can I plan my finances based on a life I’ve yet to figure out? said…

If a drop of more than 10% would make you feel like liquidating your investment, then your current asset allocation doesn’t match your risk tolerance. — Enough Wealth

I’m not going to liquidate my investment, I’m just not all that comfortable with the idea of losing my money. But I doubt anyone is really comfortable with losing cash when it comes to investing. I mean, sure some people are more risk averse than others, but the way I see it is I’m young now and I have time for my cash to recover if the market gets wonky. If anyone should be making risky investments, it’s people like me who are young with no debt. Right? I know I can survive without that $4,500. But it sure would be a shame to lose it.

GoldnSilver said…

Market fluctuation is normal. It has only been 2 weeks. Generally if you are investing for the long term, the advice is not to check your balance everyday. However, people have different habits, no one can make you do or not do something. Compare your funds to its peers or industry benchmark, that’s how you can judge your funds performance. That being said, if you are risk adverse, (seeing a drop with turn your stomach upside down). CD or bond funds are not bad options. So many people focus on time horizion…if you are young you should invest more agressively. There’s truth to it. However, just as important, one should know one’s risk tolerance. There are many investment/savings vehicles out in the market place that can help achieve your goals. Pick one that you can stomach.

You know, I’ve never been a gambler. Maybe that’s because I’m female. Maybe that’s because I was raised by a risk adverse family. But I don’t want to be dumb about it. If lots of people invest in somewhat risky mutual funds, they can’t all be “wrong.” Not that there’s really a “wrong” in index fund investing, but, I mean, it’s not like I’m rushing to trade individual stocks.

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.