What a horrendous market this week. I guess it’s not really a surprise that things are headed south. I’ve been worrying about the overall economy and all of our country’s debt for a long time. So, if a simple guy like me is worrying about it, there must be a real problem.
I’m actually not all that terribly worried about the market. I have $10,000 sitting on the sidelines in cash that I’m just dying to put in to the market. My strategy is to invest this lump sum once I feel like most of the bad news is over. By doing this, I think I’ll be averaging my overall cost in the market down and as the market comes back should be able to make a solid return. I know, I know, you shouldn’t try to time the market. In times like this though, it seems prudent to wait out the hype cycle and watch for the lowest price to buy in.
Another aspect of this for me is that I’m continuing to invest in my 401k every other week. All of these dollars are targeted at index funds and I’m excited that I’m getting to buy the shares at a lower price during this downturn. Sure, I’m seeing a loss on paper for some of the money that I’ve invested so far, but I still believe the market will come back at some point in the future. Hopefully that happens before I retire in 18 years.
Luckily I’m not interested in buying a new house right now. We are happy to stay where we are at for the long term so I don’t have to worry about getting a new mortgage. We also plan to pay cash for any vehicle upgrades in the future so I shouldn’t have to worry about needing a car loan either. I think it’s really a pretty good time to be living a "pay as you go" lifestyle. Funding your own day to day existence yourself is very empowering.
I just hope that everyone who works for these banks comes out okay. It’s disappointing to see banks and financial institutions struggling, but I’m uplifted that the bank I work with, ShoreBank, is succeeding, and has a business plan that fits with the future of finance. ShoreBank was founded 35 years ago in Chicago by people who believed that a commercial bank could restore neighborhood economies, and it’s this solid business plan and commitment to the environment which has led to success.