Author Topic: losing money faster than im putting in  (Read 21245 times)

webcat86

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Re: losing money faster than im putting in
« Reply #50 on: January 21, 2016, 01:26:36 AM »
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

faramund

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Re: losing money faster than im putting in
« Reply #51 on: January 21, 2016, 02:30:21 AM »
Well, in 2008 many of my shares took a big hit to their prices, probably around 40-50%, but their dividends, which is what I most focus on, barely changed, and those that did reduce them, pretty much recovered over the next couple of years.

So what did I do, well nothing with the shares I had, I just left them to recover in the years that followed. But after the crash, I invested a lot of money in the next 2 years (well I multiplied my share holdings by 20), and they've done very, very well.

So my approach was, ignore the dips, and then try to buy as much as possible after the dip.

MsRichLife

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Re: losing money faster than im putting in
« Reply #52 on: January 21, 2016, 02:40:45 AM »
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

In 2008 I suffered badly. I learnt a valuable lesson and I'm now far more diversified.

I'm 38, 6 months from FIRE and aim for a portfolio that somewhat resembles the Golden Butterfly: http://portfoliocharts.com/portfolio/golden-butterfly/

So far I'm fairing ok in this market as I've diversified into hedges against market downturns.

webcat86

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Re: losing money faster than im putting in
« Reply #53 on: January 21, 2016, 02:48:31 AM »

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

In 2008 I suffered badly. I learnt a valuable lesson and I'm now far more diversified.

I'm 38, 6 months from FIRE and aim for a portfolio that somewhat resembles the Golden Butterfly: http://portfoliocharts.com/portfolio/golden-butterfly/

So far I'm fairing ok in this market as I've diversified into hedges against market downturns.

Did your investments recover after 2008? Would you go into your current portfolio if you were just starting out or is it because you're close to FI?

MsRichLife

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Re: losing money faster than im putting in
« Reply #54 on: January 21, 2016, 03:16:09 AM »

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

In 2008 I suffered badly. I learnt a valuable lesson and I'm now far more diversified.

I'm 38, 6 months from FIRE and aim for a portfolio that somewhat resembles the Golden Butterfly: http://portfoliocharts.com/portfolio/golden-butterfly/

So far I'm fairing ok in this market as I've diversified into hedges against market downturns.

Did your investments recover after 2008? Would you go into your current portfolio if you were just starting out or is it because you're close to FI?

No, my investments didn't recover. I actually made the best decision for me at the time, and that was to sell all my stocks.

At a ~50% loss, I realised I needed a 100% gain to break even again: http://www.investopedia.com/articles/02/022002.asp I thought a 100% gain would probably be a long time coming and worked out that I could put what remained of those funds to better use in the meantime. I set out to pay down over $1M of debt on my real estate portfolio instead.

As it stands, the Australian Stock Market never regained those highs of late 2007, and if I'd held on I would probably not be in the same position I am today. My lesson is: to remain flexible to changing circumstances and don't assume the future will be the same as the past.

These days I have part of my stock portfolio that is purely for yield (earning ~9% p.a.), some speculation with 20% stop losses in place and some hedges to offset the loss of value of my 'yield' portfolio. I'm also diversified into property, cash and gold. I have very few bonds as they haven't been a good buy for a while.

It's difficult to say whether I would go into my current strategy if I was just starting out. I guess if I knew then what I know now, I'd like to say yes. But...when I was younger and felt invincible I thought my risk tolerance was much higher than it actually is.

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Re: losing money faster than im putting in
« Reply #55 on: January 21, 2016, 03:39:25 AM »
For those who just started out (like us - we only started doing independent investing in October), look at it this way - you've already spent the time and money to learn how to play the game and use the tools and can now effectively take advantage of this down market or dip.  In 2008 I hadn't done that, always meant to, never did, and missed out on huge, huge potential gains through to 2014 (outside of 401k investing).  Not this time.

I believe we are currently down about 2%, but thats ok - I was already nervous when we started that we were buying at the top of the market.  We have to stay a bit more liquid the next few months due to moving expenses, but intend to keep a small amount for investing and then use the bulk once we are through April for either debt pay down or stock purchases, depending on the situation at that time.  Either way we come out on top!

faramund

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Re: losing money faster than im putting in
« Reply #56 on: January 21, 2016, 04:22:56 AM »
I've also become very aware, that the people who seem to be posting the most worried comments on this forum, are those who've started investing in the last two years, primarily in the last one.

If any new investor is worrying, they should think about this. There are many people on this site, who have been investing for many years, and who really, largely, are ignoring this downturn.

Now those people have had just the same drops as the new people, but they ignore it. So if you think about it, why is that so?

Its because once you've been in the share market for a while, you know it goes up and down, and the best strategy, is just to ignore it.

So if your feeling worried, what do you want to do? Act like a newbie? or act like someone with experience.


webcat86

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Re: losing money faster than im putting in
« Reply #57 on: January 21, 2016, 04:55:02 AM »


So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

In 2008 I suffered badly. I learnt a valuable lesson and I'm now far more diversified.

I'm 38, 6 months from FIRE and aim for a portfolio that somewhat resembles the Golden Butterfly: http://portfoliocharts.com/portfolio/golden-butterfly/

So far I'm fairing ok in this market as I've diversified into hedges against market downturns.

Did your investments recover after 2008? Would you go into your current portfolio if you were just starting out or is it because you're close to FI?

No, my investments didn't recover. I actually made the best decision for me at the time, and that was to sell all my stocks.

At a ~50% loss, I realised I needed a 100% gain to break even again: http://www.investopedia.com/articles/02/022002.asp I thought a 100% gain would probably be a long time coming and worked out that I could put what remained of those funds to better use in the meantime. I set out to pay down over $1M of debt on my real estate portfolio instead.

As it stands, the Australian Stock Market never regained those highs of late 2007, and if I'd held on I would probably not be in the same position I am today. My lesson is: to remain flexible to changing circumstances and don't assume the future will be the same as the past.

These days I have part of my stock portfolio that is purely for yield (earning ~9% p.a.), some speculation with 20% stop losses in place and some hedges to offset the loss of value of my 'yield' portfolio. I'm also diversified into property, cash and gold. I have very few bonds as they haven't been a good buy for a while.

It's difficult to say whether I would go into my current strategy if I was just starting out. I guess if I knew then what I know now, I'd like to say yes. But...when I was younger and felt invincible I thought my risk tolerance was much higher than it actually is.

I'm very new to this so apologies for the questions but would you need a 100% increase if you were still buying stocks at the cheaper price in the dip?

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Re: losing money faster than im putting in
« Reply #58 on: January 21, 2016, 07:00:08 AM »
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

ender

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Re: losing money faster than im putting in
« Reply #59 on: January 21, 2016, 07:20:01 AM »
I picked a good month and a good year (so far..) to be off work and holding off on IRAs until April when we have a better idea of our 2016 finances :)

matchewed

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Re: losing money faster than im putting in
« Reply #60 on: January 21, 2016, 07:31:00 AM »
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

ender

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Re: losing money faster than im putting in
« Reply #61 on: January 21, 2016, 07:47:38 AM »
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

From their signature:

Quote
current Portfolio (20/9/15) = 3600

matchewed

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Re: losing money faster than im putting in
« Reply #62 on: January 21, 2016, 07:50:24 AM »
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

From their signature:

Quote
current Portfolio (20/9/15) = 3600

Sorry I'm not seeing your point.

zephyr911

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Re: losing money faster than im putting in
« Reply #63 on: January 21, 2016, 07:52:03 AM »
Im investing in US and UK index funds atm and my portfolio is dropping, it's down by about 10% total. i started my investing journey very close to peak prices.



i dint liek dis :'(
When my shares decline, I get excited and start dredging up extra cash to buy more.

If you believe you're buying a fundamentally good investment, a lower price during your accumulation phase is 100% positive. The more it drops, the more cheaply you are procuring your future financial freedom.

ender

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Re: losing money faster than im putting in
« Reply #64 on: January 21, 2016, 08:00:10 AM »
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

From their signature:

Quote
current Portfolio (20/9/15) = 3600

Sorry I'm not seeing your point.

It makes your point even more important because the portfolio balance is so low, anyways.  10% of 3600 is only a month worth of savings for most people - if a month worth of savings fluctuation in the market is going to make/break your will for retirement... that's not a good sign for how someone might feel about ER.

matchewed

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Re: losing money faster than im putting in
« Reply #65 on: January 21, 2016, 08:01:38 AM »
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

From their signature:

Quote
current Portfolio (20/9/15) = 3600

Sorry I'm not seeing your point.

It makes your point even more important because the portfolio balance is so low, anyways.  10% of 3600 is only a month worth of savings for most people - if a month worth of savings fluctuation in the market is going to make/break your will for retirement... that's not a good sign for how someone might feel about ER.

Ah gotcha, thanks :)

charis

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Re: losing money faster than im putting in
« Reply #66 on: January 21, 2016, 08:16:01 AM »
Thank you for this thread.  We are years from retirement.  I have finally stopped looking at my investment portfolio as "losing money."  Up until today, I would log into Mint and see our accounts "losing money" and our NW dropping, which is a huge bummer. 

After reading this thread, I went in and hide our investments from updates and will from now on manually add the money that we contribute.  That way I have a general idea of our NW, but without the dramatic lows and highs of the market.  Because they don't mean anything right now! Light bulb moment for this newbie.

cerat0n1a

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Re: losing money faster than im putting in
« Reply #67 on: January 21, 2016, 08:39:58 AM »
I'm very new to this so apologies for the questions but would you need a 100% increase if you were still buying stocks at the cheaper price in the dip?

I don't think there's any startling insight - it's just trivial arithmetic.

If a share price is $10 and goes to $5, it's lost 50% of its value. If it's at $5, it needs to increase by 100% to get back to $10.

If you're buying a stock at $5 then (obviously) you get twice as many of them compared with buying them at $10.

tj

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Re: losing money faster than im putting in
« Reply #68 on: January 21, 2016, 08:56:55 AM »
It gets worse as your portfolio gets larger and drops in a day what you earn from working for one to several months.  Fortunately by that time you're hopefully experienced enough to hunker down in the happy place in your mind and just keep imvesting

The daily movements up and down are often higher than my bi-weekly paycheck. I feel like this is a good position to be in.

dude

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Re: losing money faster than im putting in
« Reply #69 on: January 21, 2016, 08:57:13 AM »
meh. I finished 2014 with $482k in my account, and despite plowing $31k in this past year (2015), I'm only sitting at $490k.  In August, when stocks dropped 12%, I shifted 5% from bonds to stocks.  Small caps are down 13% already this year, so I shifted 3% from bonds to small caps.  Buying opportunities. Sooner or later, the market will rebound, and in most cases it's usually sooner.

zephyr911

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Re: losing money faster than im putting in
« Reply #70 on: January 21, 2016, 09:30:57 AM »
I neglected to answer the actual question. *kicks self*
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008
My tax-deferred accounts are 100% stocks and may always be, but that includes a substantial allocation to dividend stocks. That, and all my taxable holdings are in real estate, which is 40% of my NW now but growing faster than the rest (it gets ~2/3 of my new investment, and is earning higher returns). Between that, having side work that I enjoy and will continue in FIRE, and being eligible for pensions after 60, I'll always be pretty risk-tolerant with securities.

I was working in Iraq in 2008 so I maxed out 401k contributions and ignored the bloodbath. In retrospect, I wish I'd paid slightly more attention just for the learning experience. Regardless, if it happened all over again, the only way it'd change my plans is if I suddenly got greedy and decided to maintain high income just to buy more. But market returns are just a means to an end, and that end is nearly in sight regardless, so I'd have to see how I felt when the time came.

There are many ways to build in the level of safety margin that will let you sleep at night. This is a good place to learn about them. :)

webcat86

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Re: losing money faster than im putting in
« Reply #71 on: January 21, 2016, 09:54:12 AM »

I neglected to answer the actual question. *kicks self*
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008
My tax-deferred accounts are 100% stocks and may always be, but that includes a substantial allocation to dividend stocks. That, and all my taxable holdings are in real estate, which is 40% of my NW now but growing faster than the rest (it gets ~2/3 of my new investment, and is earning higher returns). Between that, having side work that I enjoy and will continue in FIRE, and being eligible for pensions after 60, I'll always be pretty risk-tolerant with securities.

I was working in Iraq in 2008 so I maxed out 401k contributions and ignored the bloodbath. In retrospect, I wish I'd paid slightly more attention just for the learning experience. Regardless, if it happened all over again, the only way it'd change my plans is if I suddenly got greedy and decided to maintain high income just to buy more. But market returns are just a means to an end, and that end is nearly in sight regardless, so I'd have to see how I felt when the time came.

There are many ways to build in the level of safety margin that will let you sleep at night. This is a good place to learn about them. :)

Is your property investment rental units or REIT? I'd like to do property but recent changes mean in the UK being a small landlord is not inviting, and can mean paying more in tax than you actually profited

zephyr911

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Re: losing money faster than im putting in
« Reply #72 on: January 21, 2016, 01:28:18 PM »
Is your property investment rental units or REIT? I'd like to do property but recent changes mean in the UK being a small landlord is not inviting, and can mean paying more in tax than you actually profited
They're two SFRs (my previous homes, rented out after leaving) and within a 3-person partnership, two duplexes.
It works out well in Alabama. Property is cheap and taxes low. I plan to double the portfolio this year at a minimum.

webcat86

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Re: losing money faster than im putting in
« Reply #73 on: January 21, 2016, 01:29:39 PM »

Is your property investment rental units or REIT? I'd like to do property but recent changes mean in the UK being a small landlord is not inviting, and can mean paying more in tax than you actually profited
They're two SFRs (my previous homes, rented out after leaving) and within a 3-person partnership, two duplexes.
It works out well in Alabama. Property is cheap and taxes low. I plan to double the portfolio this year at a minimum.

What are SFRs?

I envy your position. I'd love to do it but it's just not viable here now.

tj

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Re: losing money faster than im putting in
« Reply #74 on: January 21, 2016, 02:20:47 PM »

Is your property investment rental units or REIT? I'd like to do property but recent changes mean in the UK being a small landlord is not inviting, and can mean paying more in tax than you actually profited
They're two SFRs (my previous homes, rented out after leaving) and within a 3-person partnership, two duplexes.
It works out well in Alabama. Property is cheap and taxes low. I plan to double the portfolio this year at a minimum.

What are SFRs?

I envy your position. I'd love to do it but it's just not viable here now.

single family homes (residences)

Kaspian

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Re: losing money faster than im putting in
« Reply #75 on: January 21, 2016, 03:08:32 PM »
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

webcat86

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Re: losing money faster than im putting in
« Reply #76 on: January 21, 2016, 03:10:03 PM »

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Kaspian

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Re: losing money faster than im putting in
« Reply #77 on: January 21, 2016, 03:19:14 PM »

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.  It's also the reason the majority of passive index investors fail to match the actual indexes.
« Last Edit: January 21, 2016, 03:22:05 PM by Kaspian »

webcat86

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Re: losing money faster than im putting in
« Reply #78 on: January 21, 2016, 03:22:13 PM »


So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.

True, but that's risk assessment

Kaspian

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Re: losing money faster than im putting in
« Reply #79 on: January 21, 2016, 03:27:32 PM »


So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.

True, but that's risk assessment

And someone who's new to investing is supposed to understand their own risk tolerance?  ;)  Very much like giving a kid who just got a motorcycle license a new Harley and saying, "it's the best bike," while not considering that they're probably gonna drop it.  Everyone is brave when things are going well.
« Last Edit: January 21, 2016, 03:29:07 PM by Kaspian »

tj

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Re: losing money faster than im putting in
« Reply #80 on: January 21, 2016, 03:35:02 PM »

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.  It's also the reason the majority of passive index investors fail to match the actual indexes.

This is why I suggest balanced funds to my friends and family who ask.

v8rx7guy

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Re: losing money faster than im putting in
« Reply #81 on: January 21, 2016, 03:40:19 PM »
I am beginning to realize that many people on this forum are going to have a rude awakening when they face their first major downturn.  Seems like a lot of people here have only experienced 2010-2015 and have no idea what a 2007-2009 feels like.

webcat86

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Re: losing money faster than im putting in
« Reply #82 on: January 21, 2016, 03:40:51 PM »



So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.

True, but that's risk assessment

And someone who's new to investing is supposed to understand their own risk tolerance?  ;)  Very much like giving a kid who just got a motorcycle license a new Harley and saying, "it's the best bike," while not considering that they're probably gonna drop it.  Everyone is brave when things are going well.

Sure, all I meant was what's conservative and aggressive is situation dependent, including individual appetite for risk and loss.

urbanista

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Re: losing money faster than im putting in
« Reply #83 on: January 21, 2016, 04:26:21 PM »
I thought a 100% gain would probably be a long time coming ...

As it stands, the Australian Stock Market never regained those highs of late 2007...

It is not true that ASX never regained those highs of late 2007.

ASX200 Accumulation Index December 2007: 40241
ASX200 Accumulation Index March 2015:       52000
ASX200 Accumulation Index December 2015:  48346

Just need to reinvest all dividends.

If someone bought all their portfolio at the very high price in 2007, reinvested the dividends and sold in December 2015, he/she would have made about 2.5% nominal return. In fact, the return would have been higher due to imputation.

If someone bought all their portfolio at the very high price in 2007, reinvested the dividends and kept adding a healthy amount, that person would have done well even with the latest market drop.

« Last Edit: January 21, 2016, 04:28:00 PM by urbanista »

Ambergris

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Re: losing money faster than im putting in
« Reply #84 on: January 21, 2016, 04:38:37 PM »
I am beginning to realize that many people on this forum are going to have a rude awakening when they face their first major downturn.  Seems like a lot of people here have only experienced 2010-2015 and have no idea what a 2007-2009 feels like.

Or for that matter, 2001-02. I started investing in 1999. Think about what my investing life looks like! I'm currently roughly 75/25 (110-age in stocks in 5% increments down every 5 years). I managed not to sell during the worst parts of 2002 or 2009, even when everyone was convinced this really was the big one and we were all doomed (in fact I increased my inputs). But the little bit of bonds helped me get through the worst of it. And despite a relatively low income (and really only getting seriously started in 2003) I'm now looking at close to 500k. I should like to add this:

I made most of my money via the investments I made during those stock market crashes.


dilinger

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Re: losing money faster than im putting in
« Reply #85 on: January 21, 2016, 04:50:17 PM »
I am beginning to realize that many people on this forum are going to have a rude awakening when they face their first major downturn.  Seems like a lot of people here have only experienced 2010-2015 and have no idea what a 2007-2009 feels like.

Some of us experienced 2007-2009 with horror and did the wrong thing.  With this latest downturn, despite having *more* in the market than I did in 2007, I'm watching it with glee.  I'm accumulating shares, not losing money.  It's all about perspective, and sometimes it takes lived experience to have the proper perspective.


mrpercentage

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Re: losing money faster than im putting in
« Reply #86 on: January 21, 2016, 05:41:35 PM »
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.

Unfortunately I just got an inheritance. It's not lump summing in. Especially into a general index when we really might go into a bear market. Its sitting in JP Morgan where it will stay while I dollar cost into some companies I plan on keeping forever. It's easy to say just throw it in when a large sum of real cash is not sitting in the bank account. I don't plan on putting all of it in either. I will keep throwing in what was already planned and keep doing a little driving for Uber to add more (although I have thought about quitting because I really don't need to). You might want to buy some Home Depot because in the real world when people get a good chunk of money they fix the house first.

Psychstache

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Re: losing money faster than im putting in
« Reply #87 on: January 21, 2016, 06:00:49 PM »
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.

Unfortunately I just got an inheritance. It's not lump summing in. Especially into a general index when we really might go into a bear market. Its sitting in JP Morgan where it will stay while I dollar cost into some companies I plan on keeping forever. It's easy to say just throw it in when a large sum of real cash is not sitting in the bank account. I don't plan on putting all of it in either. I will keep throwing in what was already planned and keep doing a little driving for Uber to add more (although I have thought about quitting because I really don't need to). You might want to buy some Home Depot because in the real world when people get a good chunk of money they fix the house first.

Do you not live in the real world?

tj

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Re: losing money faster than im putting in
« Reply #88 on: January 21, 2016, 06:04:41 PM »
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.

Unfortunately I just got an inheritance. It's not lump summing in. Especially into a general index when we really might go into a bear market. Its sitting in JP Morgan where it will stay while I dollar cost into some companies I plan on keeping forever. It's easy to say just throw it in when a large sum of real cash is not sitting in the bank account. I don't plan on putting all of it in either. I will keep throwing in what was already planned and keep doing a little driving for Uber to add more (although I have thought about quitting because I really don't need to). You might want to buy some Home Depot because in the real world when people get a good chunk of money they fix the house first.

When I sold my rental real estate, I immediately lump summed the 6 figures in. I don't know that we "really might go into a bear market", but even if we did, the odds of it recovering before I need to access it (a few decades from now) are very likely. It all depends on your time horizon. And if your inheritance is enough that you don't need the growth, by all means put it in a balanced mix of stocks and bonds, index or otherwise, but DCA is typically an emotional decision rather than a logical one.

faramund

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Re: losing money faster than im putting in
« Reply #89 on: January 21, 2016, 06:13:26 PM »
I've had all my non-super investments in shares since 2000, and I don't see any reason to change. After the 2008 crash, I swapped my superannuation investments to 100% shares, and likewise, I'm keeping it there.

I'm in in Australia, and track an index called the AllOrds,
In 2000 (when I started) it was 3208.
Since then in 2002 it dropped by 9.5%
in 2008 it dropped by 45.7
In 2011 it dropped by 12.4
So far this year its dropped by 7.4

When I just checked the ASX it was 4972. That's 6.25% growth per year, and I should add in another 3-4% of dividends.

So why exactly, shouldn't I stay 100% in shares, and why should I care anymore about this years drop, in comparison to the last 4?

Would I have been wiser to sell out at the bottom of each previous drop? I don't think so.

Time is a wonderful perspective when looking at the share market.


Sid Hoffman

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Re: losing money faster than im putting in
« Reply #90 on: January 21, 2016, 10:06:29 PM »
The worst enemy for any investor is not their bond allocation, it's their own behaviour.  It's also the reason the majority of passive index investors fail to match the actual indexes.

By passive, do you mean people who are passive up until there's a major downturn, then they sell?  Either way, I agree and think you state it quite elegantly where the greatest enemy of the personal investor lies.  I've seen a number of articles posted over the years demonstrating this is absolutely true, often with an analysis showing that women are less likely to actively make changes and thus tend to outperform men because of their reluctance to change things up during a downturn.

Kaspian

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Re: losing money faster than im putting in
« Reply #91 on: January 21, 2016, 11:58:51 PM »
The worst enemy for any investor is not their bond allocation, it's their own behaviour.  It's also the reason the majority of passive index investors fail to match the actual indexes.

By passive, do you mean people who are passive up until there's a major downturn, then they sell? 

Hahaha... Yes, I guess you could say that!  :)  One of the primary reasons Bogle wanted index funds is so that people can just "set it and forget it".  By the time you're ready to retire the dollar-cost-averaging, diversification, low fees, and rebalancing will have done its job 100% of the time.  But people tinker with it all the time--upping recent "winners" (performance chasing) or they lose their fucking heads and sell an underperformer at its bottom.

"Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio."   

...It also means "don't fuck around all the time for Godssakes!!"

Villanelle

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Re: losing money faster than im putting in
« Reply #92 on: January 22, 2016, 01:02:18 AM »
I have no idea if my portfolio is down, though I'd guess it is based on the overall market.  But I simply don't care how much it is down because that number has zero relevance to my decision making.  I don't do market timing, for either buying or selling.  I don't sell or invest less when the market is down, but nor do I invest more usually, because that's market timing of a different flavor.  Maybe when I'm 2-3 year away from FIRE I'll start paying slightly more attention, but likely even then I will more or less follow a set schedule of moving money to bonds based on my overall plan. 

No muss, no fuss.  And no worry or stress.

mrpercentage

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Re: losing money faster than im putting in
« Reply #93 on: January 22, 2016, 01:32:59 AM »
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.

Unfortunately I just got an inheritance. It's not lump summing in. Especially into a general index when we really might go into a bear market. Its sitting in JP Morgan where it will stay while I dollar cost into some companies I plan on keeping forever. It's easy to say just throw it in when a large sum of real cash is not sitting in the bank account. I don't plan on putting all of it in either. I will keep throwing in what was already planned and keep doing a little driving for Uber to add more (although I have thought about quitting because I really don't need to). You might want to buy some Home Depot because in the real world when people get a good chunk of money they fix the house first.

Do you not live in the real world?

Yeah. I just told you what I'm doing with it. I am fixing the house first-- that is stucco, paint, new energy efficient windows, and a new AC/gas furnance. The rest is going into companies I like stated above, in a very methodical way, and into aristocrats that will send me dividends by check with my name on it or by direct deposit. I still also invest in my 457. What I'm holding I'm holding-- including Conoco despite the brutal decline and possible cut of dividends later this year--- I don't need that investment money because I have a real fully funded emergency fund now. What I'm not going to do in a market like this is throw it all in. That is hubris 

webcat86

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Re: losing money faster than im putting in
« Reply #94 on: January 22, 2016, 05:30:28 AM »
As far as diversification goes, who here is in bonds because they don't have other investments?

I'm going 100% equities in my vanguard LifeStrategy, so my diversification is cash (a 7000 emergency fund in high interest accounts), and my house. Unfortunately buying multiple homes in the UK is now unattractive due to new legislation.

Given I can't physically get another property, what about investing in a property fund?

dude

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Re: losing money faster than im putting in
« Reply #95 on: January 22, 2016, 07:11:47 AM »
For the first 8 years or so of investing, I was 100% equities.  When you are young and have a long time horizon, that's a reasonable thing to do. I did not panic in 2000 or in 2008, I just let it ride. I began to dial back my risk exposure in Q2 2005 (to 90/10).  I was 90/10 in Q1 2007, then dialed it back to 75/25 in Q2 2007, where I remained during and after the 2008 downturn (though I dropped to as low as 64/34 as a result of the market crash before rebalancing)..  I'm 3 years from FIRE and plan to be somewhere between 70/30 - 75/25 from now until I expire.

NumberCruncher

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Re: losing money faster than im putting in
« Reply #96 on: January 22, 2016, 07:20:46 AM »
i dint liek dis :'(

Stop looking at it. There is no point checking in on your portfolio frequently.

I personally find it kind of amusing.

"Oh, honey, apparently we're down $10k today."
"Oh? That's nice."
"Want some tea?"
"Why yes, thank you."

On paper using basic assumptions, we're 3-5 years away from financial independence, so I'd much rather have a downturn now than right before we retire.

Kaspian

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Re: losing money faster than im putting in
« Reply #97 on: January 22, 2016, 08:13:27 AM »
Totally!   And, I mean, we've recently had such a fantastic run there's no use in panicking.  I set my expectations for FIRE around a 7% average annual return--which is conservative to some but pretty damn ambitious compared to most of the neighbours/friends we all have who make 1% in a savings account.  Mint says I'm currently "2 years 1 month" ahead on my plan.  Holy crap--I'll take that!  It's all due to the great streak we've had the past few years.  We could have 3 or 4 sucky years in a row and I'd still probably be ahead on the plan.
« Last Edit: January 22, 2016, 09:20:45 AM by Kaspian »

webcat86

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Re: losing money faster than im putting in
« Reply #98 on: January 22, 2016, 10:40:02 AM »
Ok throwing my first sum into the LifeStrategy 100% now!