Author Topic: After last year's poor market performance, I'm struggling with goals  (Read 3606 times)

Giro

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I still want to retire in a few years, but now I'm thinking of pushing that date out a little and trying to acquire a few more bucks.  My previous date was May 2018, now I'm thinking May 2019.  :(

So what do I do?    I have a 23k auto debt.  Should I just pay the minimum payment (rate 2.49%) and throw a few extra bucks in my investment account to try and boost that?   Or throw the extra on the loan and try and knock that out to reduce my future expenses? 

Normally, I would not question that move, but the market kicked me in the teeth last year and has me doubting myself.

I just got the car last year in July.  I paid 42k towards the purchase since that time.  I know it's expensive, but I love her and I'm not letting her go.  :) 




trashmanz

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #1 on: February 25, 2016, 09:12:22 AM »
Goals shouldn't change due to the market, only the amount of work and effort needed to meet the goals should change.  If your goal is something important you just have to figure out other ways to meet the goal, you may not be able to rely on historical returns to get you there, maybe picking up side gigs, working harder at the main job etc.

Also,  If you really can't stand the market volatility you should consider other means of investment or lower volatility portfolio, or if possible work hard on figuriing out a way not to care so much. 

Sounds like a nice car, what is it?  I'll take a wild guess at a BMW M series of some sort?

Gone Fishing

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #2 on: February 25, 2016, 09:28:38 AM »
On average, you would be better paying the minimum on the loan and investing as much as possible.  On a typical car loan timeline, who knows what will happen, but I'd probably pay the minimum.   Just focus on your spending/saving behavior right now.  It's nice to have a date in mind, but the market could swing 20%+ in either direction, several times between now and then.  When the time comes, you'll just have to decide if you are ready.  The recent correction put me a little below 25x.  No biggie, I'm going to have to get used to it, it'll probably happen many more times over the next several years.  If something really bad happens, 6-12 months of extra work is unlikely to make much of a difference.  I'm relying on my ability to go back to work if needed.   

Axecleaver

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #3 on: February 25, 2016, 09:41:12 AM »
Giro, I sympathize because I too am running projections to see when my retirement date can be. I'm trying to keep those recalculations to once a quarter, so it's easier to ignore the volatility. I saved 80k for retirement last year, but market performance and sale of our clown house at a loss meant my net worth was basically unchanged over the course of the year. Another year older and no closer to the goal, despite running very fast.

I did the same thing you did - considered changing approach. I had the same reaction to my business goals 18 months ago when my business hadn't yet taken off. I was doing all the right things but the results were disappointing. So I carefully reviewed my approach, made sure it was right, and just trusted that things would turn around if I kept working at it. And, they did. I'm hoping our investments are kind of the same deal - we're making the right choices, we can't expect the returns to always be positive growth.

Your date's a lot closer than mine, so you're subject to more of the rollercoaster ride. You know the number you need to hit, if you need another year to get there, just push out your target retirement date and re-evaluate it in three months. Try to focus on achieving the savings goal, not meeting the time goal.

ZiziPB

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #4 on: February 25, 2016, 10:42:47 AM »
Giro, I'm on the same timeline as you are - my planned FIRE date is April 1, 2018. 

Yeah, last year was tough - income-wise it was one of my best years and I saved a lot of it but because of market performance, my NW basically hasn't changed.  My strategy is to basically double down in the next two years and save (invest) as much as I can.  I am not changing my goal date, it's just too far out for it.  If I get to the end of 2017 and my numbers don't add up, then I'll revisit.

I think in your situation, I would take advantage of the market correction and invest as much as you can, not overpay on your car loan.

Eric

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #5 on: February 25, 2016, 11:02:18 AM »
While the "market" is a broad term, the S&P 500 was up 1.3% in 2015 (including dividends).  International did a little worse (VTIAX was -4.4%)  That makes your total return somewhere between 1.3% and -1.5%, depending on your AA.

If you think that was poor market performance, how are you going to handle actual poor performance?  Especially when you have no other income?

Not every year can be 2013.  I'd work on changing your mindset before changing anything else.  We've just had a 7 year bull market.  I'd reign in the expectations a bit.

ZiziPB

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #6 on: February 25, 2016, 11:25:28 AM »
While the "market" is a broad term, the S&P 500 was up 1.3% in 2015 (including dividends).  International did a little worse (VTIAX was -4.4%)  That makes your total return somewhere between 1.3% and -1.5%, depending on your AA.

If you think that was poor market performance, how are you going to handle actual poor performance?  Especially when you have no other income?

Not every year can be 2013.  I'd work on changing your mindset before changing anything else.  We've just had a 7 year bull market.  I'd reign in the expectations a bit.

Eric, I think the OP and myself are lumping the YTD 2016 with last year when talking about poor market perfomance.  My accounts are definitely down and I have a fairly conservative allocation.  So yes, I think it's fair to call this market poor!

And BTW, neither the OP nor I are panic selling or exiting the market ;-)  Just the opposite, I'm planning to double down on my savings and invest more....

Eric

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #7 on: February 25, 2016, 11:48:56 AM »
Well sure, if you include this year when you say last year, then that certainly changes the calculation.  Strange use of language though.  :)

Giro

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #8 on: February 25, 2016, 12:22:47 PM »

Sounds like a nice car, what is it?  I'll take a wild guess at a BMW M series of some sort?

Mustang Shelby GT500.  And right now, she's a 10 second car.  weeeee......

And she's spoiled rotten...not even my husband gets to drive her. 

I did mean performance to date not just last year.  I guess it's strange to say last year, but isn't it even more strange to stop calculations on 31 December when the market has been down pretty sharp these first 2 months? 

Anyway, I'm dumping as much money as I can into the markets.  If it's a bad year while I'm FIRE, I just plan on not taking any money out.  Or limiting it, at the least. 


Gone Fishing

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #9 on: February 25, 2016, 12:38:00 PM »
Her name isn't Eleanor, is it?

Giro

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #10 on: February 25, 2016, 12:49:04 PM »
Her name isn't Eleanor, is it?

No.  She's a 2014 so that would just be dumb.  :)   She has no name, just a gender.



shotgunwilly

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #11 on: February 25, 2016, 12:51:13 PM »
Her name isn't Eleanor, is it?

My dream car

GorgeousSteak

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #12 on: February 25, 2016, 01:15:07 PM »
I think its generally not such a good idea to set goals that aren't 100% in your control.  Precisely because you can do really well (actions wise) and still miss your goal, and it'll make you feel bad.  Obviously, you don't control the stock market at all, so having any goal that relates to stock market performance goes against this idea.  Setting a very specific FI date that is still a ways off is indirectly doing this as it requires a certain level of stock market performance to build the required net worth.  I think a similar but better goal would be saving a target amount of money in year, this is fully in your control.
« Last Edit: February 25, 2016, 02:05:45 PM by ApatheticSteak »

arebelspy

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Re: After last year's poor market performance, I'm struggling with goals
« Reply #13 on: February 27, 2016, 02:49:25 AM »
A down market, when still several years from FIRE, may actually move in your FIRE date.

At the very least, it could make your FIRE much more robust.

I'd be throwing every dollar I had at the market right now, and continue to do so.

There's no point in today, in early 2016, changing your plans for 2018 or 2019, based on two months of market gyrations.  That's silly.

Consider this good practice for when the market moves in FIRE.  Don't look at it. Don't care what it's doing.  Save as much as you can, as often as you can.

When you actually get close to your FIRE number, check and see how you're doing.  For now?  Stay the course.

Her name isn't Eleanor, is it?

Nice.
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