I assume this is all a major test.
I don't believe in bonds or bond funds for a person my age or in my particular personal circumstances--I have ten years until retirement and I'm way behind when it comes to fund accrual. Better to keep buying when the market is down because it is bound to come back up and I will be glad I bought my fund shares at historic lows--that's what I tell myself.
I walk my talk--I continue to put $1025 a month into index and growth funds. Right now, I'm invested in Vanguard's S & P 500 fund, Total Stock Index fund, and the European Market Index fund. In addition, I hold funds in Ariel Appreciation, American Century Equity Income and Calvert Social Investment.
Overall, I'm down 17% which, when I allow myself to think about it, scares me to death. I started this blog last July with $176,000 in retirement savings. Now I'm down to $146,000, notwithstanding the money I keep putting in.
For all that I admire Dave Ramsey, he is so wrong about what's happening in the economy. We absolutely ARE in a recession, and I don't get why he can't admit that--I suspect it's due to his conservative/Republican politics.
My mantra is to keep doing what I'm doing--put money in regularly, assume that it will all even out in another couple of years, and DON'T PANIC.
I believe that, but for all my pep talks to myself, it is still darn hard to watch the funds dwindle.
When do I find out if I passed the test?
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We're NOT in a recession defined in Economics. We are in period of less economic growth than we had previously. This could lead to a recession, but technically, we are NOT in one.
The US is feeling the effects of inflation and other not so great econimic factors. But look it up. Technically, we're NOT in a recession YET!
Actually, as defined in Economics, recessions are declared in retrospect. So we may well be in one already--a number of economic experts believe that we are.
In the end, I don't know that it matters, except that we probably shouldn't expect a quick fix, and those of us working hard to not to incur further debt should keep on doing what we're doing. And NOT looking at our investments over the short term.
Grace,
You are buying so low now! Just wait until the market comes back! You will be fine!!! History says so!
It's hard to watch your net worth shrink even as you continue to save - but you have so much time! Keep your head up and keep saving.
Remember, your time horizon is way more than 10 years. You RETIRE in 10 yrs, but that doesn't mean you'll need all your funds in 10 yrs. You'll liquidate slowly over the next 30 years or so (God willing, of course).
I agree with meg, and would add that there are only two or three buying opportunities like this in each DECADE.
But it still take's a lot of courage to step up to the plate when fear is rampant and "the blood is running in the streets." So in my book, you've already passed, Grace.
Be prepared , keep some & invest some .
Be cautious , as Nobody can predict future,
Tracy Ho
wisdomgettingloaded
The test will be over when you retire or have all your money safely locked down. Until then ?????
If your looking at 10 years until you plan on retiring you've got time "to bring up the grade".
DH and I both put a percentage in at work (which I will be upping for mine this coming week...buy low and all that). I also plan on taking my fun money that I've been stashing and buying some individual stocks. I'll buy some cheap but long standing stock and spin the wheel and hang on. I did this with a few hundred right before we went to "war" and in about a two year period was able to liquidate them for over 10 times (or a few thousand) what I started out with. I believe in the "bounce" of our market.
Hang in there.
We are not in a recession as defined by traditional economics. However we are feeling inflation and the stagnating wages. We could soon be faced by stagflation instead.
Sounds good, but DH and I are investing his 401k, but in our Roth IRAs, we've held off. The money is in there but in a money market. Why not try to time the market a little bit.
But I still think that bonds/cash stabilize a portfolio. Like I explained, I have yet to see your numbers backing up the volatility of 100% stocks versus a 80/20, 85/15, or 90/10 portfolio of stocks/bonds. The numbers have been crunched by www.fundadvice.com.
Hmmmm..."don't believe in bonds"...guess you slept through Finance 101 huh? Bonds MUST be part of every rationally constructed portfolio! What is it about asset class diversification that you don't understand? Oh that's right...you SKIPPED class....lol. Hope you enjoy the continuing losses :)
Times like these can be pretty scary -- hang tough and if anything ratchet up your investments. Think of it as the market on sale, its 17% cheaper than last July.
Hi,
I know that this is an old thread, but I have recently stumbled onto your blog and am reading some old posts.
I am curious as to why you are investing in both an S&P 500 fund and a total stock market fund. Are you intentionally overweighting large caps? Would you be willing to explain your thoughts regarding this?
Thank you.
Hi,
I know that this is an old thread, but I have recently stumbled onto your blog and am reading some old posts.
I am curious as to why you are investing in both an S&P 500 fund and a total stock market fund. Are you intentionally overweighting large caps? Would you be willing to explain your thoughts regarding this?
Thank you.
Hi Momthing--Welcome to Graceland! I'm not a sophisticated investor, but through my employer, I have a free subscription to Financial Engines. I usually take their advice when it comes to my mutual funds. Based on other formulas I've seen, I'm somewhat heavy on both large-cap and small-cap funds. I have room for that because I don't buy bond funds. If I had to choose between the Total Stock Market Index, and the S & P Index (yes, there's a fair amount of overlap), I'd go with the latter. But the former has traditionally performed better.
Thank you for replying. I am familiar with Financial Engines. I am able to use them for free through Vanguard. They recommend to me that I overweight mid-caps (I'm not really sure why). Also, they recommend that I reduce my bonds from 30% to 20% (which I do not wish to do), and that I add a long-term bond fund (which I REALLY do not wish to do), but only in the amount of $971 (which is not possible, minimum is 3k).
Overall, I think that Financial Engines is a great tool.
Best of luck to you with growing that nest egg.
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