My investment portfolio is a hot mess. Now that it’s at $500k, I am taking the appropriate steps to better understand my investments and their success (or lack thereof) compared to investing ALL of my money into general index funds over the last 10 years. Continue reading Investment Checkup : Loyal3 / FolioFirst : beating the S&P?
What’s a girl to do when her short term and long term “gains” are actually bright red losses?
Sell! Sell! Sell!
Now, before you berate me for selling when the market is down, let me explain, I am not selling to get out of the market.
My Vanguard shares were down significantly enough that I wanted to take action. Investing in index funds, I don’t have a strong opinion on one or the other. I had a dividend appreciation fund and a small-cap fund that today were mutually down about $500. That’s a $500 loss I can take against any gains made this year. I could wait for it to go down even more (it probably will) or, I could just pull out the money now and plop it straight into another “different” investment to reap the potential gains (or further losses) of being in the stock market this year.
I pulled out a good $23k from these two investments, and moved them into my Vanguard Healthcare fund which I’m slowly but surely plugging away at the $50k minimum for the Admiral version (I love me a good low-fee admiral fund.) So now my healthcare fund is at about $34k and I’ll have $500 in losses to write off come tax time next year. Not so shabby.
Note I’m not a tax professional and I don’t actually know what I’m doing, so get some real advice before you take any of mine. 🙂
I’m a bit obsessive about my networth. Ok, a lot obsessive. It’s this game I play which helps me weather the storm of the everyday ups and downs of life. I know you’re not supposed to monitor your stocks on a daily basis, but I do, because that’s what I do. It’s certainly thrilling when they go up. Not so much when they go… down… and down some more.
Today the stock market had its 9th biggest decline in history so – when I looked at my Mint account and my jaw dropped to the floor with little birdies flying around my head – well, that was not an overreaction. It’s pretty painful to see all this money you’ve been saving for the year just poof disappear, at least on digital paper. It could come back tomorrow, or more could disappear. Who knows. China is making everyone freak out. My Apple stock is tanking, but so is the rest of the market.
I am not going to sell. I am not going to sell. I am not going to sell.
My entry into the stock market was interestingly timed. I got in right before the great recession. I had enough money in to feel the pain of losing almost half of it, but I was making so little at the time that the amount I was able to invest wasn’t really significant enough to cause serious long-term damage. Then, as the market recovered, I obtained jobs where I made more money, and more money. And I didn’t really like to spend all that money at Sephora, so I invested it each month. As the stock market went up, so did my networth. It was incredible to be investing in the market at that time. It clearly wasn’t going to last forever…
Today the market is overvalued. It’s due for a few major corrections. The trick of corrections is to A) not sell and B) buy more each time your heart jumps to your throat when you check your life savings, but not too much more in case the market continues to drop, which it probably will do.
Think Long Term and Forget About the Short-Term Fluctuations
Today I bought $1000 worth of Vanguard funds and $500-ish of Tesla stock. I’m fighting my stock market fears by throwing money at it whenever it surprises me with a swift downturn. Hopefully that will pay off in the end. It’s not rocket science, but it seems to have worked thus far.
I’m holding my breath right now as I have a feeling 2015-2016 is going to be a majorly bumpy ride. Are you in buy mode right now? How much do you think the market will correct itself before it stabilizes? Do you have any favorite funds that perform well when China implodes on itself for its overvalued currency?
Oh, and forget about my $400k networth goal this year… now I think $350k networth is a much more reasonable goal to close out the year with. That’s still $50k more than I closed out last year, but given my salary increase I thought this year would be a lot stronger. The whole $500k before kids goal is seeming more and more unlikely — though if I can maintain my income level… my plan is to get pregnant in June/July 2016, and then have a kid in March/April 2017… that’s still about a year-and-a-half from now, so I could be somewhere in the $425k range at that point, which isn’t HORRIBLE. $425k growing at an average of 5% per year after 30 years, if I don’t touch it, will =$1.8M, just shy of my $2M retirement goal. But if it grows at 10% over 30 years then that’s $7.4M. So all I need to do is not touch that future basis and hope that the economy doesn’t entirely crash for a long term depression. $400k-$500k before I have a kid is the NEW goal.
One of the open questions I have re: investing is what – realistically – my investments will be worth after X # of years. Of course, one can estimate 3% annual return on the S&P 500 to be “conservative” and 10% to be the opposite, but in reality, what is the likely average annual return of the stock market?
While there’s no way to predict the future, lucky for us, there is a way to look at historical data to understand how we’d answer this question if we were to begin investing, say, in 1980.
According to this calculator – The S&P 500 Dividends Reinvested – we can find out that answer:
- We started investing in 1990, and stopped in 2010, giving us 20 years of investment.
- Total S&P 500 Price Return: 256.374% (inflation adjusted: 118%)
- Annualize S&P 500 Price Return: 6.6% (inflation adjusted: 3.974%)
- S&P 500 Return, Dividends Reinvested: 437.278% (inflation adjusted: 228%)
- Annualized S&P 500 Return, Dividends Reinvested: 8.770% (inflation adjusted: 6.13%)
- We started investing in 1984, and stopped in 2014, giving us 30 years of investment.
- Total S&P 500 Price Return: 1094.274% (inflation adjusted: 427%)
- Annualize S&P 500 Price Return: 8.6% (inflation adjusted: 5.7%)
- S&P 500 Return, Dividends Reinvested: 2299% (inflation adjusted: 960%)
- Annualized S&P 500 Return, Dividends Reinvested: 11.175% (inflation adjusted: 8.19%)
- We started investing in 1974, and stopped in 2014, giving us 40 years of investment.
- Total S&P 500 Price Return: 2829% (inflation adjusted: 538%)
- Annualize S&P 500 Price Return: 8.8% (inflation adjusted: 4.7%)
- S&P 500 Return, Dividends Reinvested: 1204% (inflation adjusted: 1963%)
- Annualized S&P 500 Return, Dividends Reinvested: 12.049% (inflation adjusted: 7.8%)
- We started investing in 1964, and stopped in 2014, giving us 40 years of investment.
- Total S&P 500 Price Return: 2239% (inflation adjusted: 206%)
- Annualize S&P 500 Price Return: 6.5% (inflation adjusted: 2.2%)
- S&P 500 Return, Dividends Reinvested: 10367% (inflation adjusted: 1270%)
- Annualized S&P 500 Return, Dividends Reinvested: 8.748% (inflation adjusted: 5.3%)
- We started investing in 1999, and stopped in 2014, giving us 15 years of investment.
- Total S&P 500 Price Return: 37.5% (inflation adjusted: -2.845%)
- Annualize S&P 500 Price Return: 2.1% (inflation adjusted: -.192%)
- S&P 500 Return, Dividends Reinvested: 81% (inflation adjusted: 28%)
- Annualized S&P 500 Return, Dividends Reinvested: 4% (inflation adjusted: 1.6%)
Well, what this shows us is that generally investing in the S&P index over the long term works out fairly well. After inflation with dividend reinvestments 5% is a reasonable conservative estimate annual return for a long-term investment. However, if you started investing in 1999 and have invested for 15 years, you’d pretty much be at break even at this point (assuming you put all your money in up front.)
I’m still looking for a more robust calculator that enables one to input annual investments and see what these would have turned out with historic data. Do you know where one exists or care to build one I can use? 🙂
One of my informal new years resolutions was to get a grasp on my stock trading in 2014. To start, I wanted to balance my portfolio so it’s less risky and more focused on dividends (thanks to some insight from a reader, I made some significant moves in January I’ll be posting about later.)
This post, however, is about how much money I’ve missed out on in hindsight with poor trading choices. I’m looking only at my taxable Sharebuilder account at the moment. Since 2008, according to my Sharebuilder account history, I’ve made 372 trades.
21 of those were sell orders.
Like everyone else who has a dime or more invested in equities, I’m concerned about the future of the stock market. Whenever the market looks so bleak, everyone is concerned. And that’s usually the best time to invest. Yet with my yearly investments becoming more sizable, this feels a lot like Las Vegas. Even with diversification, it doesn’t help when all (or most) stocks are on red.
After receiving my paycheck for the past months and reimbursed expenses, I realized that I’m sitting on $16k liquid in my checking account. Part of me hates writing about this because I know I’m so lucky to have the luxury to ask the question “where should I invest?” But this may also be a temporary income boost and I want to invest wisely.
Yesterday, I pulled out my social security statement and studied my yearly income since 2002. Other than last year, I made somewhere between $0 and $25,000 each year. Last year, I broke $60k for a full year’s worth of work. This year as of Sept 1, even with 2 months of unemployment (unpaid), I have earned around $70k this year. And with the way some contracts are shaping up, I expect to make an additional $10k to $30k by the end of the year. So now I face the unlikely problem in a time of economic crisis – what do I do with all this money?
The easy answer is: spend it. Not on wasteful purchases, but things that I need or will need soon. I could buy a new car, or a “new” used car. Or I could invest in property somewhere (though that requires stable long-term income, which I am not confident I’ll have, especially with my plans to go back to school in the next two years.) So where do I put the excess cash?
I’ve already maxed out my IRA and will, within this month, max out my 401k (no match, bummer.) I will likely put another $2000 in my HSA which is invested in very low-risk funds. My IRA is in Sharebuilder and I bought 5 funds – the gold ETF, the silver ETF, two high-dividend ETFs and a REIT ETF. My 401k is invested in a mix of equities and bonds, and I’m not clear what is in it exactly. With a large chunk of my savings this year going into my 401k, I’m concerned that in the next ten years we’ll have deflation, high taxes, and my 401k will turn to mush.
But I’m willing to take that risk with $16.5k because it could be a very good time to invest as well. I’m just not sure I can stomach taking that risk with more money. Not without understanding the real economic situation in this country and the world. History doesn’t always repeat itself, or even if it does it may take a longer time to turn around. I’m young now, I can handle that, but if the next 5-10 years will be lost decade #2, why should I play?
The whole media fueling the fire is disturbing as well. I can’t tell how much of the stocks slipping these days is all the fear stories about how bad the economy is doing. It’s a domino effect that goes in a circle downward. What if all the news resources lied and said the economy was turning around and there’s a ray of sunshine close ahead? If people would invest and spend money than… well, that seems to be the only way to dig ourselves out of this mess right now. I don’t know if I agree with that, but what else can we do? We need people spending again so companies will start hiring again. That’s how capitalism works, right?
But it will take a long time to trickle down to lower and middle classes. The media couldn’t lie for that long. News would get out that the future is not so sunny. And everything would crash again.
Or you can just – apparently – print money until the cows come home and thus make every dollar worth less and less and less. That can’t be a good thing.
Right now lots of big names in economics are saying that we may have a “double dip recession” or – worse? – a depression… because we never actually recovered from the first recession. I wish I understood economics jargon more so I could make sense of this, this, this and this … and the thousands of other economic gloom and doom stories I’m reading.
Any feedback from those of you out there who are more economically savvy?
But that doesn’t stop me from doing it. At 25, I have at least 35 years until retirement. So I just have to believe that over time, the markets will go up.
Regardless, when it comes down to picking stocks and ETFs, I’m shooting blind. And maybe that’s best. The market rallied a bit this week. My new thing is to try to invest heavily on the weeks when news is all doom and gloom, and hold back weeks that it picks up. Not that I’m really trying to “time the market” — I invest monthly, but I do try to guess at the best spot per month to put in my money. I’ve got it on auto pilot at Sharebuilder, and it only invests on Tuesdays, but I don’t put money in on Monday until I know we’re off to a bad week.
And that’s kind of working out. For now. My Sharebuilder account (which is my “fun” investing account to see if I can beat the market) is now down “just” 30.30% Buying stocks and ETFs the last two months has helped — the only way I’m going to make back the money is to invest when the market is doing its shittiest, and hope that it goes up. I’m just worried I’m too diversified. But I do that because I don’t know what I’m doing.
I own 11 different stocks/ETFs in my Sharebuilder account. Not sure if that’s too much or too little. I need to stop getting excited about different ETFs and stocks, putting $100 into them and then moving on. It’s time to really hone in on my better performing stocks and invest in them. My ETFs are actually the worst performing right now, except for maybe Whole Foods. But then again they go up and down and up and down, so who knows.
My gains and losses sheet on Sharebuilder is all red except IHI – the medical devices ETF I just purched a small amount of two weeks ago. That’s up $8. It’s refreshing to see something green on that page.
The account has lost $931.03 to date. The more I invest now, the more likely that in 35 years I won’t remember how scary it was to lose that much money that fast. (Not counting the $7000 that my Vanguard accounts are down, give or take a few hundred on the given day.)
I wish I had more appetite for risk… because a year ago I would have shorted the market and today I’d put more money in. But I’m, you know, only able to stomach $10k losses a year at my current payrate. Maybe more next year.
My aunt and uncle are in the upper class. They have a really nice house in a really nice town in a really nice part of the Bay Area. They have two kids. They have lost hundreds of thousands of dollars in the stock market. My uncle, who is self-employed with a once-thriving web marketing business, is struggling to retain clients. My aunt, who is in charge of a profitable department at an otherwise struggling company, just got a 10% paycut. With an expensive mortgage, even six figure and then some income isn’t enough to pay for their lifestyle. So they’re watching their spending. They are worried about just how bad this all is going to get.
While I’ve “lost” over $9000 so far in stocks, I feel lucky. I have a job. I make $60k a year, plus any freelance income I can bring in here and there. While I’m still not the best at managing my money (I just spent $100 at Sephora on a few eyeshadows and lipstick… I like to think of it as “stimulating the economy”) my cost of living is not that high. I don’t have any kids, my rent is cheap (well, at least compared to what I was spending living on my own before I moved in with two roommates, and I don’t buy much other than the occasional overpriced pair of jeans or high-pigmented and pricey eyeshadow. So my life is pretty cheap. And I like it that way.
For everyone who has a family to take care of… a mortgage to pay… this recession is really, really bad. It makes me want to never have kids or up my desire to purchase a house. Sure my room is tiny, I have to put up with my roommates for better or worse, and I don’t get to cook naked (which is seriously the biggest downfall of living with roommates), but… my life is affordable. Even as I lose thousands in the stock market. If I had kids… a house… I’d be screwed right now.
In short… not so well.
In long… ignoring the $7500 I’ve “lost” in my Roth and Vanguard index funds, I’ve lost another $1051.99 thus far. I have invested in 11 different stocks and ETFs in my Sharebuilder account ranging the gamut from a gold index to a natural foods supermarket, and everything in between. Not one of them is in the “green.”
The best performing is my gold ETF (GLD), which is down $10.95 on a $533 investment. Not bad, but it’s also not making money.
Everything else is doing really shitty.
Here’s my investment list, and losses:
Comverge (COMV) – Invested $205.51 thus far, it’s currently worth $115.96 (loss $89.55)
Wisdomtree India Earnings (EPI) – Invested $482.59, now $262.56 (loss: $220.03)
iShares Brazil Index (EWZ) – invested $251.72, now $104.30, (loss: $147.42)
SPDR Gold Trust (GLD) – invested $533.67, now $522.72, (loss: $10.95)
iShares Medical Devices (IHI) – invested $150 recently, now $146.58 (loss $3.42)
Market Vectors Coal ETF (KOL) – invested $120.26, now $32.76 (loss $87.50)
McDonalds Corp (MCD) – invested $296.74, now $273.41 (loss $23.33)
Powershares Global Clean Enegry – invested $462.31, now $195.88 (loss $266.43)
Procter & Gamble – invested 100.00, now $89.03 (loss $10.87)
Whole Foods Market (WFMI) – invested $121.23, now $36.33 (loss $84.90)
Financial Select Sector (XLF) – invested $148.29, now $41.20 (loss $107.09)
For a grand total of…
or -36.61% of my total investment.
For what it’s worth, I’ve invested $14,950.00 into my Roth IRA and Vanguard Index Funds, and I’m currently down $6849.33 on that account, or 45%.
So even though my stock picks are doing crappy, they’re still doing better than my basic index funds for now. I wonder how they’ll all look in a year from now.
This year, I’m going to be making at least $60k. Which is wonderful. I plan on saving as much of that money as I can. The question is where to save.
2009 is an interesting year to have the opportunity to put away a chunk of money. With the stock market down, it seems like a great time to start making consistent, monthly long-term investments in the stock market. But without a 401(k), where do I put all of my savings? It’s surely a luxury to be able to ask this question, but one that I have to start thinking about nonetheless.
There’s also the real possibility that even if I do an amazing job at work in 2009, my startup will not receive funding to go on in 2010. Thus, I have to plan for unemployment at some point, just in case. The good news is that if I do a good job and the company goes under, god forbid, i’ll have a really solid network of references to help me find my next opportunity. So my only concern here is making sure I do an amazing job over the coming months. That’s just about the only thing I need to do for this situation to turn out positively.
But the question remains, where do I put this savings? It’s so hard to find answers to this question because most people say “max out your 401(k) first and then max out your Roth.” Well, what if you don’t have a 401(k)? Then where does your money go?
There are a lot of options. I’m not sure, from a tax perspective, which are the right options for me. And maybe the tax savings isn’t something I should be concerned about? Savings, in general, is a good thing.
So… a few other factors play in to the equation. I’m pretty sure I want to go to grad school in a few years. I’ve decided I likely want to go for an MBA, hopefully at a fairly good school. I’m not sure when I’m going to do this exactly. But I know I need one to become a product manager, which is my goal right now. There is always a chance I won’t end up going to grad school, but it’s looking more and more likely as I advance my career and figure out my long-term goals.
There’s the possiblity that I will move with my boyfriend to New York or wherever he goes to grad school (which is even more of a definite than my potential grad school experience) and have to find a new job. NY is a super expensive city, obviously, so having a solid emergency fund will be vital. I already have an emergency fund of $7k, but I’d like to grow it if I’m going to be moving to NY.
Assuming I can put away $10,000 for the year, where do I put it?
$5000 goes into the Roth IRA.
Then, where does the rest of it go???
Some options that I know of:
1. Mutual funds. No tax help there. Taxed going in and coming out.
2. An HSA. Which still has a limit of $2,900 a year. And my company would put in $1,200 a year. So that’s only $1,700 more on top of the $5000 in the Roth.
3. An 529 education savings fund. The problem with that is if I don’t go to grad school and/or have kids who go to college, I lose the money.
There are two types of 529 plans: prepaid and savings. Prepaid plans allow one to purchase tuition credits, at today’s rates, to be used in the future. Therefore, performance is based upon tuition inflation. Savings plans are different in that all growth is based upon market performance of the underlying investments, which typically consist of mutual funds. Most 529 savings plans offer a variety of age-based asset allocation options where the underlying investments become more conservative as the beneficiary gets closer to college-age. [via wikipedia]
4. P2P lending. I’d like to try out lending club. My Prosper accounts are doing ok, only one default, and I’ve heard better things about Lending Club.
5. ETFs and individual stocks. I already put about $2,000 into a Sharebuilder account (that’s down to $1500). But the coming year may be a good time to buy some good stocks at bargain prices. Unlike two years ago when I started investing.
6. Buy property. I don’t really have enough money to do this, nor do my circumstances equate to this making sense. But I know there are tax benefits to owning property, which is why I’m including it in the options.
7. CDs. CD rates suck right now. But they’re at least safe.
8. Bonds and other such lower risk investments. Prob doesn’t make sense in my 20s.
That’s about the only options I can think of right now? I don’t think employed people can open a SIMPLE IRA or SepIRA… so I’ve run out of options. Or do you guys have a better suggestion for me?