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  • Indifferent Investing

    As the markets dipped a little with news of the Omicron variant recently, I realized I didn't much care. My spouse and I have been minimally investing in retirement accounts over the past few years (now in the low six figures), and have only recently set about maxing our retirement accounts starting 2022. Since we're roughly 20 years away from retirement, and are comfortable with the risk at this time, our portfolio is essentially 45% S&P 500, 45% TSM, and 10% REIT. I realize the psychological impact of these swings might be different with seven figure retirement accounts, just as it is with a 4 or 5 figure retirement account, or if we were closer to retirement goals... but realizing I wasn't impressed and barely amused by swings bigger than a biweekly paycheck was a surprise to me.

    Should I be feeling... more? Or is this "peace" natural, seeing as we are hands-off index investors who don't react to things and have a written plan?

  • #2
    Losing money always sucks, and it's a spectrum correlated to dollar amount as you allude to, but feeling more is what will lead you to hit the eject button at the worst possible time. Unrecoverable error.

    Remember this (lack) of feeling, and maintain it, regardless of dollar amount.

    Pray that you are fortunate enough to see a seven-figure drop one day, and have the wisdom to maintain that peace and keep your hand off the button.

    Side note: Make an effort to turn your minimal investing into maximal investing, which will require moving beyond your retirement accounts.

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    • #3
      It just means your asset allocation is perfect for you and understand that historically and mathematically the stock market trends up over time.

      With larger accounts come larger values and you’ll get used to those numbers too over time.

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      • #4
        Now is the time to train yourself to avoid emotional reactions and stick with a plan. You have two paths for wealth accumulation:
        A) personal capital - future income
        B) financial capital - future income

        Fear of permanent loss is a learned behavioral finance reaction. B) is "now in the low six figures", consider "now in the low seven or eight figures". That is when emotional reactions require the learned behaviors. "Oh well, the markets cratered" is a swing bigger than the "annual paycheck" you will be fine. Make a mental note of your reaction and train yourself. The market goes up and down, without fail.

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        • #5
          Psychologically , it is a lot different seeing your accounts go down by one or two thousand , vs two or three hundred thousand on a "dip" or bad news. The closer you come to retirement , the more you appreciate this. This is the best time , to figure out how to turn off the financial emotions and avoid knee jerk selling and buying.

          As far as your first comment, about minimally investing in retirement, you may want to rethink that one.

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          • #6
            It is different seeing your account change by 4 to 5 to 6 figures on a daily basis, but ultimately if you see it enough (and your account is big enough) you do get used to that as well.

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            • #7
              The market has had an incredibly good year.

              I think the S&P500 is up about a 24% return over the past 12 months? My entire salary has been dwarfed by my market returns this year. This is multiple times the expected return and given how long and large this bull market has been, we should be expecting a large and/or long correction at some point.

              It’s not hard to feel fine when the market has had an incredibly good year.

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              • #8
                It's different when it's more money and it's different when you're closer to retirement and you'll be needing that money soon. Find an investing style that suits you, sock away the money, and don't worry about swings that will be just a blip on the screen when looking at the big picture.

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                • #9
                  I would not overestimate your risk tolerance based on the events and market swings of the last few years.

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                  • #10
                    When your account drops by a ton instead of freaking out pivot your mindset to think that equities/stocks are now on sale! When prices drop on consumer goods people think this way and go out and buy more if anything. You should have the same mindset with equities/stocks.

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                    • #11
                      Just because the bull market has been great or we have had above average returns doesn’t mean we are due for a big correction. We could start chugging along at ‘average’ market returns moving forward and would still regress to the mean

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                      • #12
                        Originally posted by Random1 View Post
                        Psychologically , it is a lot different seeing your accounts go down by one or two thousand , vs two or three hundred thousand on a "dip" or bad news. The closer you come to retirement , the more you appreciate this.
                        This depends on how much you have, your underlying personality trait, how many times you have seen the market crash and burn and rise up again and whether you have sufficient cash on hand to go through the downturns ( 2-3 years).

                        Since all my market investment is in stocks and not bonds, I have seen 100-300K drops at times but it does not frazzle me. I have witnessed major stock market crashes starting with the Black Monday of 87 when I was just having a few stocks in the market to crashes in 2000 and 2008 and the various stagnations. Sometimes I wish for these events to put some money down.

                        But I can see how a newcomer can really get rattled by a 1000 point Dow drop ( which is really nothing but a blip).

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                        • #13
                          Originally posted by VagabondMD View Post
                          I would not overestimate your risk tolerance based on the events and market swings of the last few years.
                          Last 10 years.

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                          • #14
                            Originally posted by Random1 View Post
                            As far as your first comment, about minimally investing in retirement, you may want to rethink that one.
                            That was a function of income. 2019 was our first year with a household income >100k. I'm pretty happy with our start.

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                            • #15
                              Originally posted by Special Delivery View Post
                              That was a function of income. 2019 was our first year with a household income >100k. I'm pretty happy with our start.
                              Don't take it as a criticism. Rule of thumb is 20% of gross per year, not just retirement accounts. It's just math.

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