Jan 29, 2008

I’m staying the course by avoiding my account balances

Intellectually, I completely agree with FMF, JLP and everyone who says the best way to invest in the market is to keep investing and not be scared off when the market is down. It’s easier said than done, though, when I see that not only have my gains from the past year been wiped out, but I’ve actually lost some of the principal that I invested.

In the long run, it’s not going to matter much. I’m not planning on withdrawing money from any of my investment accounts for at least 15 years. And most of my investing is on automatic - withdrawals from our paychecks to our 401(k)s, automatic withdrawals from our bank account, and so on. It’s not too hard to forget about the automatic investments and just let them be.

What is hard is logging into the various web sites and seeing the actual account balances. On some sites, it’s unavoidable because it’s the first thing that’s displayed when I log in. And some of the sites I can avoid but some of them I need to get into for reasons other than checking the account balance.

When I see those low numbers, especially when I know that the number is less than what I’ve deposited into the account, it’s hard not to get depressed, or at least not feel a little bit down. That’s when I start wondering what else I could or should be doing. And if I don’t stop my mind from wandering off too far, I’ll end up driving myself crazy with “what if”s and “I wonder”s. What if I used our savings to pay off our debt? I wonder if we are diversified enough. What if I put the money that I was going to invest in the stock market into a CD? I wonder if I should change the allocation of our retirement contributions? And so on and so forth.

The easiest way to maintain my sanity is to avoid seeing those low account balances in the first place. So I do what I can to minimize the number of times I have to log in on the various web sites. I take a quick glance at paper statements to make sure they look about right and then file them away. I try as hard as I can not to think about the money I’m losing, and to focus on the fact that my dollar-cost averaging will pay off in the end.

Which isn’t to say I won’t be relieved when this plunging stock market ride is over.

What about you? Are you staying the course, and if so, what are you doing to calm your fears?

Image credit: Yahoo! Finance


SavingDiva said...

I'm continuing my retirment contributions, but I'm not going to purchase any stocks or anything else right now...Also, I'm only going to look at my retirement funds once a month (I used to check it weekly).

Anonymous said...

I don't bother looking at them very often - think biannually. In any case, I don't keep a running total in my head or remember what my previous balance is without looking it up, so I probably wouldn't realise that they've gone down.

Overall, I think I'm working on going with the most sensible answer and training myself to ignore some of the emotion.