Investing in stocks is not my cup of tea. The trades that I have made, really haven’t gone all that good. I rode a couple dogs all the way down to the 0.00 price as they went under. Not sure why. I guess I just didn’t know what the heck I was doing. I did buy a little Microsoft. Of course, I bought it after the wonder years. I’m still upside down in the shares, although I have double the shares that I used to because they did a split a couple years ago. After the negative experiences I had buying individual stocks, and after reading my 999th investing article, I made the decision to just buy index funds. Now don’t get me wrong. I’m not saying that buying individual stocks is a bad idea, but for me, right now, I’m just not comfortable with it. I’m slowly building the courage to try again with some individual stocks, but haven’t done anything yet.
What keeps coming up in my mind is the fact that dollar cost averaging over the long term, can bring pretty decent returns. That, coupled with index funds, seems to be the fairly low effort way to invest. Of course, I’ve only been doing this for a couple years and most of that is happening every two weeks in my 401K. It turns out I’m doing pretty well with this strategy, because the market happens to be up. I’m doing my best to ignore the market each day as to not second guess myself. The reality is that I don’t have a ton of options in my 401K anyway, so this is about the best approach I could take.
It’s in my ROTH ira that I really need to start thinking about doing things differently. I’m using the same approach in it, but my options are pretty much limitless since I have my ROTH at a standard brokerage firm. (online of course) It’s in my ROTH that I’m considering branching out in to some individual stocks. One of the things that I like about what I’m doing now is that the index funds I’m buying are “no load“. Basically, it isn’t costing me anything to make the trade automatically every two weeks.
So, that’s my situation. It isn’t sexy, but I think it’s okay. I feel like I’m taking the turtle approach as opposed to the rabbit.
Whenever I’m questioning my ability, or my approach, I think back about 3 years ago to a coworker of mine. He was investing in his 401K and oftened told me what he was doing. He was over 55 and had no other savings or retirement. He had only been at the company for about a year so he only had a few thousand dollars in his account. His strategy was literally “buy high, sell low”. What he would do is log in to his 401k account about once a month and watch the different positions that he had. If one of his positions was down and one was up, he would take the money from the position that had gone down and put it in the position that had gone up. Literally, he was realizing his loss every time. I tried to explain to him that this wasn’t such a good plan. He would nod his head and agree and then, do exactly the same thing the next month. This happened about 4 times before I finally tried one last time to help him. I said, “Look. Your balance keeps going down. The money that you are putting in every two weeks is literally being given away to someone that you don’t even know. That’s why your balance keeps dropping. I have an idea. Why don’t you just write me a check every two weeks instead. If you do, you can feel good that you actually know how your money is getting used. I’ll tell you what I do with it and be sure to let you know all the joy it is bringing to me.” He didn’t really get my joke and just laughed it off. The sad thing is, I think when he left the company, he used the money anyway. So, on top of giving so much of it away while he was there, he then gave another 10% of it away to the government since he withdrew it early.