Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Personality issue not an investment issue. What's the big deal? Enjoy the action
"Personality" is a huge deal. A disciplined person can remain invested in the market even in fraught and oppressive times. Be he/she will be emotionally miserable.
Quote:
Originally Posted by mysticaltyger
How much you earn and what percentage of your earnings you save are things you have much more control over.
While this is true, its significance depends on where one happens to be, in the investment life-cycle. For young investors just starting out - starting from zero - annual rates of return are almost immaterial. All that matters is aggressive savings... fiscal discipline. At the opposite end are people like our friend Mathjak. Even if he were to return to the workforce full-time, even his gross annual earnings would be less than a typical year in the market. So, in the mature part of the investment life-cycle, how much we save (or earn) matters far less, than getting another percent or two, in annual returns.
I call this the "paradox of wealth". As the ratio between our accumulated portfolio and our earnings as employees grows, we become more dependent on the vicissitudes of the market, and less on our own ingenuity, fortitude, spunk or sweat.
For young investors just starting out - starting from zero - annual rates of return are almost immaterial. All that matters is aggressive savings... fiscal discipline. At the opposite end are people like our friend Mathjak. Even if he were to return to the workforce full-time, even his gross annual earnings would be less than a typical year in the market. So, in the mature part of the investment life-cycle, how much we save (or earn) matters far less, than getting another percent or two, in annual returns.
Exactly. It's not a bad lifetime model. One gets to make the investment mistakes early in life and not suffer any unrecoverable damage. Over time the accounts grow, and so do the daily and annual fluctuations in value. Eventually a diligent saver can get to the point where some of the daily fluctuations are more than a year's worth of savings, but they typically have decades to grow accustomed to the increase in fluctuations.
With that said, there are probably people who are so busy with life that they rarely look at their accounts. The values are wiggling all over the place but there's no awareness of what's happening, until finally they are retired or near retirement. Only then do they realize how much the value is changing daily, weekly, monthly. Some can cope, but probably others cannot accept the variability.
Honestly, everyone has to deal with this in a way that works for them personally. I can only explain how I've come to deal with the market's occasional misbehavior.
It's a Ben Graham comment that really resonates for me. He suggested that in the short term the market is a voting machine, but in the long term it's a weighing machine. If you buy shares at a sensible valuation, and hold them long enough for the underlying company to multiply its earnings two-fold, three-fold, etc... IMO you are all but assured to make money on that investment. Of course the market doesn't hand out absolute guarantees, which is why I don't put 100% of my money in stocks. But for most of us the equity market is the best and most convenient way to grow our assets.
So... study the companies that you own, or that your fund owns. If they are prosperous, your investments should serve you well. Not month-by-month or even year-by-year, but over longer periods of time they will be fine.
The DJIA fell 0.24% today. On $130k that is a $312 loss. Hardly earth shattering.
Just wait till you see daily swings of $25k, $50k, or monthly swings of $100k. And that isn't even with that much in the market compared to the 1%ers.
You need to buy index funds and keep all financial data off your phone.
Yes, but that's $3,120 on a $1.3M portfolio, and $31,200 on a $13M portfolio. And this was a mild day. There were days in February with 2.4% losses (and more). So that's $312,000 on a $13M portfolio.
It should be an investment rite-of-passage, when one experiences one's first 6-figure daily loss... on a portfolio almost entirely in index-funds... by no means all of which, is in equities.
But let's go back to that $130K portfolio. Has its owner earned $312 today, at his regular day-job?
If someone cannot accept 5-10% losses in their portfolio, then they should not be investing in the stock market. Just wait until you lose 50%.
Gains and losses are routine in stock market investing (or any investing). As long as your gains are much greater than your losses over the long term, you are on the right track.
I have about 130k of my own money to invest, but anytime I put it in I worry so much and check the stocks at least every hour everyday! The problem is I'm a very tight person who likes to take risks if that makes sense. I just can't bring myself to invest and forget. Then if he market or a stock I was thinking of buying goes up a lot, I drive myself crazy over it. I stopped investing for a year because of this. Is anyone else like this and how do you cope?
So I will go under the assumption that the reason you are stressing and feel like you have missed out is because there is no real plan in place. Now when I say that, I mean a investment plan, and a life/retirement plan. If you had an investment plan, you wouldn't be out of the market or obsessing over how much something you didn't buy has gone up. This is the first step. Get invested, have a plan, know your risk tolerance and what your objectives are.
Second, develop and implement your life/retirement plan. When do you want to retire, what do you want to do, where, with whom, for how long. How will you occupy yourself in retirement, meet with your buddies/friends and what will you do and how often. Will you have hobbies? Will you have philanthropic goals?
Third, after becoming invested and set in your plan goals/targets, if you feel you want to THEN speculate...feel free to trade. Now, notice here I say trade. There is A BIG DIFFERENCE between investing and trading, you must understand this. If you feel you want to get in on something that you may have in your investment portfolio, make sure you won't over expose your portfolio, but know it's fungible. Great if it goes up, sucks but oh, well if it doesn't.
You will find more piece of mind, less stress and more understanding of what you're actually working towards vs. the daily grind of just putting it away & waking up the next day to do again.
I would recommend sitting down with an advisor who has planning experience, preferably a CFP. I think if you do it will do wonders.
I have about 130k of my own money to invest, but anytime I put it in I worry so much and check the stocks at least every hour everyday! The problem is I'm a very tight person who likes to take risks if that makes sense. I just can't bring myself to invest and forget. Then if he market or a stock I was thinking of buying goes up a lot, I drive myself crazy over it. I stopped investing for a year because of this. Is anyone else like this and how do you cope?
You cope by not putting your money into risky investment vehicles.
If the stock market is too scary for you then just stick it in a savings account where it will depreciate under inflation
Every investment is a risk. If you feel bad, think about those who have lost family fortunes over the wrong investments. Donald Trump almost did, twice.
generally broad market investments are not about risk . they are about volatility . risk and volatility are very different .
volatility is just the markets going through their typical market cycles over the long term .
bad investor behavior and mis-matching short term money to long term investments can change volatility in to risk but by themselves markets have little risk over the long term .
even at 65 we have long term money we are not eating with for 20-30 years .
a 50/50 mix has never lost money over any 10 or 20 year period .
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
