What I need right now are a bunch of little health, wealth, family and spiritual victories, confidence boosts to tell me I'm on the right paths.
I need to resist the urge to kick myself for following common advice to allocate my investments to indexed mutual funds, and finding the DJIA has returned a little less than a negative 2% return over the past eight years.
And to be kind to myself for underestimating, yet again, how much taxes we'll be owing. I withheld a little extra, and set a double-digit pre-tax contribution for my 401(k)s, and itemized, but I still have this knot in my stomach telling me to prepare to pay $8,000 extra.
I will make some calculations to determine at what price point it makes sense to buy a hybrid or alternative fuel vehicle over continuing to use gas-powered vehicles. It amazed me to learn that a multimillionaire didn't pay over $10,000 at any time in his life for a new car. Will the payback period for buying a hybrid next year be within five years? How long do I expect to own the car?
I feel that, bit by bit, truth is coming to me from all sides, and believe that if I make gradual changes in habits and master renunciation of ego and materialist promptings of my weak flesh, I'll get to where I want to be, where I should be.
I'd like to graph, month to month, the increase in satisfaction for dollars spent, as in Your Money or Your Life. I'd like to notice more how not refinancing my house, how not using the car so often, are saving me money. I'd like to remind myself in the evenings that I could be stretching, meditating, exercising with the tot, looking through seed catalogues, reading Gardening in Tough Times, cleaning my house, writing letters, supplementing my son's education.
Self-Flagellation Stations
January 30th, 2008 at 08:34 pm
January 30th, 2008 at 11:11 pm 1201734700
January 31st, 2008 at 12:19 am 1201738755
January 31st, 2008 at 01:41 am 1201743711
DJIA isn't a large index.... They're not necessarily representative of the market.... On the other hand, I guess it's "good enough" in that the past 8 years or so haven't been kind at all. I mean, we've been having a weak economy, and then there's 9/11.
I dunno. Trying to look at the charts within only certain time periods can allow you to draw nearly any conclusion you want really. I'll never forget the time when people were selling online business websites and tech opportunities, but they were only offering stats from 1995 to 2000. I'll bet if you only look at or stretched it out to include that bull run, the numbers might look a little different.
Also, please consider that past performance is no indication of future performance.
I guess it doesn't help that I don't know what kind of index fund you've been looking at.... Nor do I know your true target horizon.
But anyway, please feel free to take all this as static noise. I'm not trying to give advise so much as trying to ease your mind.
January 31st, 2008 at 04:22 am 1201753331
Broken Arrow, I don't know where to begin with this. I have invested through the dot-com bust, through 9/11, and I'm not feeling rich. Maybe it's time for my own static noise.
I've already posted about beating myself up for not being able to tell if accountants employed by a midcap or largecap are fudging numbers so the analysts will report numbers that make people want to buy the stock. Now I get to beat myself up for believing in a magic 8-10% return. I have Vanguard Index funds in things like intermediate treasuries, short-term corporates, international value, value companies, S&P 500 index, for the most part except for my 457 plan, which has Artisan International, Artisan Small Cap Value, T. Rowe Price International Bond, and an S&P 500 fund.
I remember in 2002 lamenting that nothing available was giving an 8% return. I thought if stocks were down, bonds were up, and what did little people like me invest in when both stocks and bonds were down? How do we get ahead? Foreign currencies?
January 31st, 2008 at 01:28 pm 1201786110
The thing is, there is no investment out there that is both high enough and safe enough to rely on... especially in today's market. Somewhere, somehow, we all have to take a hit. I don't know what your target horizon is, but I decided to take a hit by accepting a long target horizon. For what it's worth, that's what Warren Buffet does as well: Growing money slowly.
If your time frame is short, and you still want to get fairly high returns, you'll probably have to take on an extraordinary amount of risk. It's great and all, but you may also lose quite a bit of money....
What I am personally attempting to do is to cut down diversification. Doing so exposes me to greater volatility, which also amplifies the returns as well as the risk. However, I am supplementing the lack of diversification with what I hope will be quality data through due diligence. If you think about it, the practice of diversification is to emphasize quantity over quality, in the face of lack of data. Now, I'm attempting to gradually emphasize quality over quantity. Of course, it wouldn't be easy, but it's something I don't mind spending the time and energy to try.
At the very least, I have a feeling bond funds are going to perform very well this well.. or at least the first half of the year. Some have suggested that internationals supposedly can do well, but I kind of disagree.... A lot of economies and markets are susceptible to the US economy, and they can take a hit as well. The year-to-date yield for my international fund is -8.44% right now.
January 31st, 2008 at 07:47 pm 1201808822
I think I'll put it back in my queue.