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Advice for quickly vanishing contributions

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  • Advice for quickly vanishing contributions

    Any advice for dealing with contributions that vanish within 1-2 days due to stock corrections?
    I put in 7K twice a month at set times into VTI in my taxable. Lately more often than not, the day after I put in my contribution, my portfolio is corrected back to pre-contribution level.

    It's such a downer. Makes me want to just put money into cash or bonds though I know I should stay the course...

  • #2
    I’m guessing you’re young-ish.

    My advice: figure out when you will need that money. Then look at VTI performance over that number of years range, pick any year. Otherwise, don’t look. You are a classic case of behavioral finance. Dont worry it’s common, but you need to get over it because you’re doing the right thing.

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    • #3
      Check back in 10-20 years.

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      • #4
        Do contributions once a month. Halves the numbers of lots you have to manage if you want to tax lost harvest.
        If you have substantial paper losses good time to do TLH.

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        • #5
          When the portfolio gets big enough, a rough couple weeks/month can wipe out a year-plus worth of contributions. I focus more on the things I can control: savings rate, limiting lifestyle inflation. I know if I take care of those things, everything else will shake out just fine

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          • #6
            Pull up a graph of VTI or S&P 500.
            Start with 1, 5, 10 years and then click All.
            Now tell me which direction you think your returns will go Long Term. Keep investing for the long term. It works. Inflation is guaranteed to lose money in the long term. You can look at that graph as well.
            Behaviorally, you are reacting to short term market fluctuations.
            Take away also: don’t invest cash you will need within 5 years. 10 to 50 years you will be fine.
            Frame your reference and anchor on long term,

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            • #7
              Maybe you should pick a different day of the month to invest.

              Set your contributions to automatic withdraws from your bank account , and forget about it for a number of years.

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              • #8
                Thank the Market Gods. Your prayers have been answered.
                The market is in drawdown; seize the opportunity to invest at a bargain.

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                • #9
                  Your money has not vanished. You bought X number of shares, and still have X number of shares. And the odds favor that in 20 years those shares will be worth a lot more than they are today. So put your investing on automatic pilot and stop looking at your accounts!

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                  • #10
                    Stocks are on sale. Automate your contributions and stop looking at your holdings until you start seeing headlines about stocks going up.

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                    • #11
                      One hack I use is to look at the total number of shares you own, not the dollar amount.

                      Think of your overall goal in your investment accounts as accumulating as many SHARES of VTI as possible.

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                      • #12
                        as others have said, instead of being a downer reframe your thinking because it's true: stocks are on sale. These are almost the only thing I can think of where when the price goes down people get upset.

                        If the money you're putting in is for retirement or something else down the road in 5+ years, who cares that it's "vanished?" If you need the money within 5 years, the usual recommendation is to not invest it

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                        • #13

                          Maybe pick a better place to invest.

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                          • #14
                            Originally posted by JBME View Post
                            as others have said, instead of being a downer reframe your thinking because it's true: stocks are on sale. These are almost the only thing I can think of where when the price goes down people get upset.

                            If the money you're putting in is for retirement or something else down the road in 5+ years, who cares that it's "vanished?" If you need the money within 5 years, the usual recommendation is to not invest it
                            I'm not sure VTI is on much of a sale, though yes this is good way to think about it. Nothing like in 2/2020 for instance (which was very brief but solid TLH opportunity). I can see if OP is just starting out it might seem that way though. Stay the course.

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                            • #15
                              I put in some 60K in early January right after I was paid my bonus/profit sharing check only to watch my total vanguard accounts decrease by some 70K year to date. It is depressing. I had some experience in the 2008 financial crisis though where I would watch much smaller amounts disappear every time I deposited it into my 401K. I decreased my contribution rate at the time because I was tired of watching my money disappear. In retrospect, those dollars invested probably had some of the best rates of return I have ever invested. I don't know if this time will be different, but you have to remember- every financial crisis/downturn/etc is "different". If it weren't different, it probably wouldn't have happened again. Unless you need the money imminently, I would just continue investing and hope for the eventual best.

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