Since this is a post on investments, let’s get the platitudes out of the way: You’re in it for the long-haul. Look at the market’s performance over time. It’s just a bump in the road. That many Bogleheads can’t be wrong. This also isn’t going to be a post about how my dividends are now another income stream or how my returns are outperforming my spreadsheet estimates by six months on my FIRE journey. Why? Because that isn’t my reality right now.
Right now, my savings account is outearning my Roth IRA for the current year and year-to-date. My Roth is only .2% ahead of my savings since inception. The numbers are bleak. But I get it. I understand the power of compound interest. I think the estimates are far too generous, but I get the principle. I’m sold on investing. Since my big goals for the year centered on investing, I thought I’d share three mistakes I’ve worked to correct this month:
Looking too much. When I moved my entire Roth IRA over to Vanguard, I checked that account like it was my job. Once a day? More like once an hour. Phone, computer, tablet. It didn’t matter, I was logging in even when the market was closed. And sometimes it was really exhilarating and satisfying. Most of the time, though, it was like a punch in the gut followed by a period of self-doubt. About a month ago, my dad was watching me check my retirement account from my phone. His response: “You’re 30 and you check your account more than I check mine. Find a hobby.” Touche, Dad.
My Fix: At first, I was going to change my password to a deterrent. Stop looking. Step away. Abort mission. But I’ve never been successful at hiding things from myself. Cookies, soda, Easter candy, you name it. So I actually had Mr. P change my password. It’s stored with our other passwords, so I know I could access it in case of emergency. Now, we check the account twice a month, unless we’re adding money.
Investing once a year. I’m a chickenshit investor. I really am. I white knuckle clicks on Vanguard worse than the armrests during airplane landings. While I make sure to max out our Roth IRAs every year, I usually wait until right before the deadline. Which is just about the dumbest thing I could do. But it makes my illogical and fearful brain a little bit calmer to hang on to that money longer.
My Fix: I’m moving at least $500 a month from our savings into our Roth IRAs. I’d be lying if I didn’t say I flinch a little bit every time. But I’m assuming that, just like a bad breakup, a fine wine, an expensive cheese, or a haircut I can’t stand, this, too, will get better with time. And if Kelly Clarkson really was telling the truth and this only makes me stronger, I’ll follow suit with my taxable account. Gulp.
Expecting returns that others talk about. Post titles you don’t see trending on Pinterest: I Lost My Pants this Month. I Hate You, Vanguard. 1.2% Returns Since Inception. My IRA is Killing Me Slowly. They’re not sexy. They won’t attract clicks. And they might be mildly hyperbolic. But I’ve thought all of these things ad nauseam for the past two years or so. I’ve come to the realization that investing is like gambling: people love to tell you when they’re winning, but get much quieter when they’re losing. The difference, though, is that investing is a long-term game and the general trend of the market is an upward one*. So, there’s a good chance I’ll come out ahead. I can say that about my IRA. Vegas? Not so much.
My Fix: I’ve learned how to tune out the market noise. Now I need to do something similar with personal finance blogs. It won’t stop reading them. I won’t stop celebrating with bloggers. But I’ll try to be more cognizant of the fact that these people have different numbers and different income than me. And not everyone decided to get heavily into the market right before the disasters that were last summer and last fall. How to Not Time the Market is the working title of my memoir.
*Excuse me while I knock on every piece of wood in my house, find a wishbone, grow a playoff beard, and refuse to wash my socks until the ripe old age of 97.
So Tell Me…Have you had to fix any investment mistakes?