Category Archive

I think there may be a slight self-righteous attitude about how to deal with market swings floating around. All the “smart” pf bloggers are buying now, or wishing they could buy at the very least. Or rather, most are staying the course. While I have yet to read anyone say they are pulling out of the market, or even cutting back, I have heard some nervous chatter. This nervous chatter seems to get bombarded with comments about how perhaps the nervous poster doesn’t have the stomach for the stock market.

This is the first time I’ve ever been “in the market” during a dip, and it would be a lie to say that I don’t notice and abhor the fact that my 401k contributions aren’t even keeping it level. Of course it makes me nervous! No one likes losing money, even though I know, deep down, that I’ll make money in the long run and that I’m not retiring for years and years. It is much more fun to see my accounts and net worth grow rather than stagnate!

Still, I think I am able to handle it. I’m not changing anything, and I’ll keep investing as planned. Just because I’m nervous doesn’t mean I am not suited for investing! It just means my net worth updates will be much less exciting to me.

I’m glad I frame my goals in terms of “contribute $x to this”, so market conditions have little bearing on whether I can accomplish them!

Speaking of goals, a mid month spending checkup may be in order. I’ve nearly spent my “eating out” budget (don’t I always!) but am on track for grocery and probably gas. I’ll be buying a plane ticket soon (!) but I have been stockpiling small amounts of money in a travel fund that I can use for that, so it should be an almost transparent purchase. I haven’t spent close to my budget on personal, entertainment, or clothes. Things are looking good.

My 401k lost $100 dollars today, and my Roth about the same. However, my 401k has 3 times what my Roth does! Not that you are supposed to check your gains and losses daily, but NPR was all abuzz with news of the Dow Jones slipping, I couldn’t resist.

Still, I have been planning to reallocate my 401k for several days now, after realizing how little I knew when I made the choices I did. I still don’t know that much, but now I am ready to learn.

I am a big fan of buy and hold, of picking some asset classes and rebalancing about yearly. But buy and hold does assume that the original choices were well thought out! Were mine? No they were not. Over the next week r so, I’m going to investigate where my 401k money is going, and where it should be going, and figure out an approach on how to get it where I want it to be.

My Roth IRA is secondary for three reasons. First, it has less money by about 1/3. Second, it is in a target date fund for 2040, and I’m fairly comfortable with that. Third, the choices there are infinite (!), and it seems like a harder fish to fry! Though I heard a rumor that Vanguard’s target date funds had a much lower expense than Fidelity, my current broker. I must investigate switching in the future.

First things first, where is my 401k money invested? Last night I made a new tab in my finance spreadsheet for investments. Now that I’ve done it, I’m shocked that tab never existed before! There are some fees and expenses that I have never (not even once) glanced at, and honestly, I have no solid logic for picking the asset classes I did. I’m almost embarrassed to post them, actually, but here they are. I realized I had a whopping 5% in a stable value fund! I do not mean a bond, I mean stable value, with a goal to make $1 always worth $1. Oh my.

With 15% bonds and 5% stable, no wonder it held value better than my Roth. Still, i’m 24, I don’t think it is the wisest choice. And the Equity Income fund? It invests in large cap “income” funds. What does that even mean? As a young investor, is an income fund something I should be interested in? These are questions I need to answer.

The next step is research. Thus far, I’ve been looking into the “Lazy Portfolio” theory. Realistically, my 401k options are limited, so I can’t just pick what I want. I know i want to put a portion of my money into the index funds. I also will use some mutual funds to get my hands on some other asset classes. But I don’t know which asset classes I need.

I’m not ready to reallocate yet.