Investment Update Jan 2021 – the market makes you go Oof!

Over the last several months, I have learned something interesting for those of us in the final stages of getting to FI. When the market “sneezes” you may freak out.

When we were younger and had a smaller amount of money in the market (say $100K total in 401K, IRA, investments, etc) a market drop of 2% – 3% (which is fairly normal) would cost us $2K – $3K that day. While its money, its not the sort of thing that gets your stomach turning over. You knew that long-term, the market will go up. Just “buy and hold” baby!

Well, fast forward 10+ years and we’re coming in for a landing on the FI runway! At the beginning of the year, we had $1.46M in our various investments, and hoped to get up to $1.6M by year-end with what we were putting in and market advances. Yay!

A week before the end-of-month I checked, and we were up around 3% for the month, so over $40K while continuing to work at our current jobs. Looking good? I should have known better, because every time I check a little before month end, I end up regretting it. This was no different.  

For the month, we’re off $0.45%, or roughly a $6.2K loss. Not too hideous (especially compared to 1st qtr 2020) but a far cry from up 3%. We saw almost $50K of value evaporate in the space of 4-5 trading days. As the folks at Stacking Benjamins have noted in the past, it really does make a difference when the market drops and you lose 5-6 figures vs. a few thousand (or hundred). It shakes you.

I’ve spoken earlier how I think stocks are currently overpriced and due for a serious correction (20%?). I have to prepare myself that, if that happens, I’m going to see $280K of my money evaporate like that! I don’t want to leave  the market – I’m just not a market timer. So I’ll have to just prepare myself and soldier on if it happens.

For the month, some items performed OK, others “not so much”

S&P500: -1.0%

REITs: +0.2%

Small Cap: +2.8%

International: 0.0%

Bonds: -1.0%

My dividend account (dividend stocks and REITs) was down about -0.9%.

Again, my intention is not to alter my asset allocation or “get out of stocks” but I am mentally preparing myself for a very bumpy 2021.

Hope everyone is healthy and your market returns for the rest of the year go up!

Read more

Mr. 39 Months

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.