I’m An Investor, Are You One Too?
Yesterday’s guest post I ran was a really timely one for me, for investing has been on my mind more and more lately. I don’t really think a whole lot about it (meaning, on a day to day basis), but I have a Roth IRA and my spouse has a 401K (as well as a traditional IRA), so we are both investors. We know very little about investing as a whole, and only the basics of the details of what we’re specifically doing, which is why, I think, I don’t really give it too much thought.
As the debt elimination plan comes to fruition, I think a little more about investing each day. I want to be able to retire. I didn’t have kids just so they can support me in my old age (although sometimes I think of telling them that when they are older and chuckling), and I want to be smart with my money and our money and make good choices.
My spouse has been contributing 6% to his 401K to get the full company match (which is 20% of that 6%). Yesterday I told him to up it to 10%. If I believe that the idea of long term investing is a good one, and that eventually things will go up just as they have gone down, then right now, the stock market is on sale. So I figure we should take advantage of that. I was going to wait until all the non-mortgage debt was eliminated, but I decided to be crazy. My spouse thought maybe we should wait until we finished off the debt, but we talked about it and he came too agree with me.
Because, for now, it is taken out pre-tax, it won’t be as big a shock to the paycheck as it could be (although it will still be noticeable). His portfolio is the “balanced” choice, which means it is about equally invested in stocks and bonds, so it hasn’t taken quite as much of a hit as the stock market as a whole, but there are still plenty of “stocks on sale” within it.
Besides, if I decide I am really and truly crazy, we can scale back the contribution to 6% again. You only live once, after all.
I think debt elimination has gone to my head. It remains to be seen if it is in a good way or not. 
October 23rd, 2008 at 12:24 pm
The earlier you start, the easier it will be to achieve your retirement goals. Time is a powerful key to achieving financial security. Look at how saving early in life can increase your potential for a secure retirement. Don’t delay and pay the high cost of waiting. For every 10 years you put off saving for retirement, you’ll need to save three times as much to catch up.
Most people are “loaners.” They invest their money in what they consider to be safe investments, usually at a local bank or credit union. Being a “loaner” can be a barrier to your financial independence. Where do you have the potential to get the kind of rate of return you need to keep ahead of inflation? Equity investments or, simply put, the stock market. The market takes you out of the “savings” mode and puts you into the long term “investment” mode. Mutual funds are one of the best options available today. They offer an opportunity to participate in the stock market without having to select and manage individual investments yourself. Even in a down market, dollar cost averaging, which involves investing a set amount consistently over time, will help you come out better financially in the long run than saving alone.
October 23rd, 2008 at 1:18 pm
Congrats! Just make sure it’s well allocated: spread it around!
As I’ve said, my Dad had a very comfortable retirement because he had invested intelligently. I’m only disappointed he didn’t share his decision making strategies and the importance of investing in general with us. We (DH and I) waited several years before taking advantage of DH’s employer investment plan, so we got a late start. Oh well. Invest early, widely, be brave. Oh, and remember the difference between “real” money and VALUE. We’ve lost value, but as far as I’m concerned no real money!
October 23rd, 2008 at 11:29 pm
Good move. I am considering increasing my retirement fund contributions too.
October 24th, 2008 at 2:49 pm
I think upping your percent salary input into your husband’s 401k is a great idea. The stock market is at a discount. One other consideration might be to change your asset allocation. If you are trying to take advantage of the future upward correction of the market I would recommend having more than 50% of your account in stocks. It all depends on your age and risk aversion, but if your intent is to benefit from the market rebound, it might be optimal to put more money into stocks than bonds.
October 25th, 2008 at 4:40 am
I just increased my contributions to my retirement program. Back up to 10% from being at 5% for a few months. Once I adjust the budget and figure out holiday travel costs I’ll know if I can go higher.