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Given what you state below, when you are ready to invest again I suggest you look into low cost market indexing. Rather then focusing on a few stocks, spread your risk across the entire market while seeking to emulate its return.
Quote:
Originally Posted by redguard57
I'll tell my story to explain.
At the end of 2007 I had just gotten out of the army and had a $30K chunk of cash I'd saved from deployments that I thought I'd be smart with and invest. I made the mistake of investing at all when I wasn't ready - I took the advice of people that were like "Invest!" All my friends went and bought Mustangs with their money and I was like "Ha, you guys are stupid I'm going to be smart." We were all young and stupid and with too-full wallets. In the end, though, I kind of wished I'd bought a Mustang - at least I would have had a cool new car. These were the funds, if you're curious - CIBCX, IFACX. They're not bad funds and relatively safe - had I stuck with them I'd have increased my principal about 30% but like I said it was not a good idea in retrospect.
The problem was my instability. I also got my bachelor's degree that year (already had a ton of credits from when I was in school earlier and credits I'd racked up in the military so it was quick), got a job and few months later lost it due to massive layoffs, whoops! I don't know about you, but 2008-2011 was absolute jobs hell. There was nothing. NO-THING and I was living in "jobs paradise" Austin, TX - I got beat out by desperate people with tons of experience willing to take entry level salaries. The worst experience was when I was rejected for a damn call center job saying they had more experienced people to choose from, wtf.
So.... I needed the $30K I had invested to start living on - which circa late 2009 was something like $20K. Locked in that loss. It was traumatic. This was the money I had banked while fighting for the country that sent me to a stupid war - that was the one bright side of what I'd gone through and I effed it up. On top of that I was pretty down about the whole economic situation - I felt that my buddies and I had fought in a wrong headed war and our thanks was returning to economic destruction. My mood was not good then, I had depression, anger, the whole deal. The 20K kept my bills paid for a while then my dad got sick and needed help and some of it went to help him out.
I went back to grad school. GI bill paid for tuition and the 20K kept me going until they hired me on as a TA although I still had to take some student loans out. I STILL had issues finding a real job for about a year then in 2012 finally found one that paid about $46K, now I'm still at it making around $53K which goes up about 2-3% per year plus I got a promotion just this year which should raise me 4-5K more.
But yeah, because of that trauma I'm very hesitant about putting my hard-earned money into the markets. I just don't trust them. My first and foremost goal is preservation. I'm going to get back into it but with much more diversification and a fully fleshed out emergency fund of at least 14 months of expenses.
A lot of people don't understand that mindset and think I'm missing opportunity. Ironically, the one person who really understood was my great aunt who just died last year at age 101 - she lived through the Depression and she knew exactly how I felt - the lack of trust for banks and the markets, etc... To me I see crash around every corner when I look at it.
I'm 52, single and have about $600K in my 401K. I can retire in 3 years but have no post-retirement plans in place. Unlike my co-workers, I've never attempted to time the market. I just let it ride and not worry about it. As a result, I have substantially larger 401K than many of co-workers.
I'm 52, single and have about $600K in my 401K. I can retire in 3 years but have no post-retirement plans in place. Unlike my co-workers, I've never attempted to time the market. I just let it ride and not worry about it. As a result, I have substantially larger 401K than many of co-workers.
Same here (about letting it ride). 2008 is nothing more than a blip in my rear view mirror. My only regret is not taking advantage of the crash to buy more. :-)
I'm 52, single and have about $600K in my 401K. I can retire in 3 years but have no post-retirement plans in place. Unlike my co-workers, I've never attempted to time the market. I just let it ride and not worry about it. As a result, I have substantially larger 401K than many of co-workers.
That's easy to say for someone with $600K in their account (a 2008 style crash would have taken it down to around $350K). You're in the top 8% or so - median net worth for ages 45-54 is $85,000. http://www.fool.com/investing/genera...res-where.aspx
At the end of 2007 I had just gotten out of the army and had a $30K chunk of cash I'd saved from deployments that I thought I'd be smart with and invest. I made the mistake of investing at all when I wasn't ready - I took the advice of people that were like "Invest!" All my friends went and bought Mustangs with their money and I was like "Ha, you guys are stupid I'm going to be smart." We were all young and stupid and with too-full wallets. In the end, though, I kind of wished I'd bought a Mustang - at least I would have had a cool new car. These were the funds, if you're curious - CIBCX, IFACX. They're not bad funds and relatively safe - had I stuck with them I'd have increased my principal about 30% but like I said it was not a good idea in retrospect.
The problem was my instability. I also got my bachelor's degree that year (already had a ton of credits from when I was in school earlier and credits I'd racked up in the military so it was quick), got a job and few months later lost it due to massive layoffs, whoops! I don't know about you, but 2008-2011 was absolute jobs hell. There was nothing. NO-THING and I was living in "jobs paradise" Austin, TX - I got beat out by desperate people with tons of experience willing to take entry level salaries. The worst experience was when I was rejected for a damn call center job saying they had more experienced people to choose from, wtf.
So.... I needed the $30K I had invested to start living on - which circa late 2009 was something like $20K. Locked in that loss. It was traumatic. This was the money I had banked while fighting for the country that sent me to a stupid war - that was the one bright side of what I'd gone through and I effed it up. On top of that I was pretty down about the whole economic situation - I felt that my buddies and I had fought in a wrong headed war and our thanks was returning to economic destruction. My mood was not good then, I had depression, anger, the whole deal. The 20K kept my bills paid for a while then my dad got sick and needed help and some of it went to help him out.
I went back to grad school. GI bill paid for tuition and the 20K kept me going until they hired me on as a TA although I still had to take some student loans out. I STILL had issues finding a real job for about a year then in 2012 finally found one that paid about $46K, now I'm still at it making around $53K which goes up about 2-3% per year plus I got a promotion just this year which should raise me 4-5K more.
But yeah, because of that trauma I'm very hesitant about putting my hard-earned money into the markets. I just don't trust them. My first and foremost goal is preservation. I'm going to get back into it but with much more diversification and a fully fleshed out emergency fund of at least 14 months of expenses.
A lot of people don't understand that mindset and think I'm missing opportunity. Ironically, the one person who really understood was my great aunt who just died last year at age 101 - she lived through the Depression and she knew exactly how I felt - the lack of trust for banks and the markets, etc... To me I see crash around every corner when I look at it.
Bottom line: You have to overcome the trauma. Investing in rental properties can be just as risky as the stock market. I know someone who went bankrupt investing in rental properties. It wasn't the rental properties that were the problem. It was his poor decision making.
And the funds you chose were ridiculously expensive with expense ratios in the 1.4% range... and too volatile for your situation. I generally like American Funds, but they really are only worthwhile if you can get the "A" or cheaper share classes in your 401k plan. Otherwise, they're simply too expensive for the small time individual retail investor.
Vanguard Wellesley Income would have been a much better choice.
So, bottom line is you're going from one extreme to another with your emotions. People who do that typically invest badly in whatever they choose. To be a good investor, you have to have control over your emotions or it won't work. A fund with modest volatility like Vanguard Wellesley Income can help in that regard because it's 60% bonds and 40% dividend paying stocks. Like I said, it lost less than 10% in 2008 when the economy was tanking....making it much easier to stick with.
I bet his balance wasn't $600k in 2008. It is only that high now because he kept dollar cost averaging through the recession (buying more when prices were low) and now is enjoying g the fruit of his labors. "Wiser" investors stopped contributing when the market crashed and waited until prices started to rebound before getting back in.
I bet his balance wasn't $600k in 2008. It is only that high now because he kept dollar cost averaging through the recession (buying more when prices were low) and now is enjoying g the fruit of his labors. "Wiser" investors stopped contributing when the market crashed and waited until prices started to rebound before getting back in.
Did "wiser" investors do that? How did they know when prices had actually rebounded?
Not sure if I've already responded, but I'm 34 and have a little under $85K.
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