And if you have only tuned in to investing and the stock market in the last few years, this is the kind of result youâre accustomed to:
Look at that lovely, pretty uninterrupted upwards trajectory! (Green thrown in just for emotional manipulation.) This is the performance of Vanguardâs Total Stock Market Index fund, a good representation of âthe general stock market.â
Itâs understandable, then, if youâve felt pretty sanguine, pretty comfortable with the whole investing thing.Itâs as if itâs been marked down by 11%.
As I finish this writing this, Jack Bogle has just died.Donât wig out and sell all your stock.Itâs the best time to buy.You get the very same thing, but at a lower price.His last book was called Stay the Course, and that is the simple, if not easy, message I leave you with here.[Bad Break Habit A Steps 7 To]
Is your first true taste of stock market losses making you think that maybe working with a financial professional is a good idea? Reach out to me atÂ firstname.lastname@example.orgÂ orÂ schedule a free consultation.
Holding company stock is incredibly risky:
Concentrated holdings in any single stock is risky, as you canât smear your risk out over a bunch of companies, some of which might go up, some of which might go down.And hopefully that new perspective will encourage the right behavior.[Per How Writer 100 First Month As A To Your Freelance Make]
My clients at Facebook certainly had a rather crappy second half of 2018 (compared to the general US stock market, in the blue line):
If youâve got Facebook stock, you could probably be easily persuaded by my typical advice to clients who own company stock: âsell most of your company stock ASAP.â
But my clients holding Etsy stock in the 2nd half of the year:
or Amazon stock for all of 2018:
…are feeling Pretty Smug right now.Also otherwise known as the beginning of one of the greatest bull markets (that is, markets that go up) in US stock market history.
So, you need to think about how holding company stock will affect your finances and your life.From early September to early January, it looked like this:
Damn you, 401(k)! Why hast thou forsaken me?!Howâs Your Company Stock Faring?
Even if your 401(k) has been a bit disappointing of late, maybe your company stock has been a shining beacon of investment awesomeness.It might therefore be confusing the matter of âHow should I approach my investments?â
(To be clear, Iâm Very Happy for my clients who had, for whatever reason, large holdings in Amazon or Etsy or Twilio, etc.Those funds do it automatically for you.[Awesome Yours Does 401k How Compare Anatomy An Of]
A share of Vanguardâs Total Stock Market Index Fund, for example, cost about $149 in early September.Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved.
There are some things you can do to âoptimizeâ your investments:
You can ârebalance.â If youâre in a target-date retirement fund, surprise! Youâre already rebalancing.(When I say âblindly,â I donât mean that in a negative way…I actually think itâs very very good to simply shovel money into your various savings buckets without it being a big thing.)
Itâs been reeeeall easy to get my clients to follow my advice to continue to max out their 401(k)s (or even more, if they can make after-tax contributions) and invest in target-date retirement funds, which are heavily invested in stocks if your retirement date is decades out.[About Budget To Portland Yourself You Travel 3 Have Things Experience]
Sign up for Flow’s weekly-ish blog emailÂ to stay on top of my blog posts and videos, and also receiveÂ our guideÂ How to Start a New Job (and Impress Yourself and Everyone Else)Â for free!
Disclaimer: This article is provided for general information and illustration purposes only.Â Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services.After all, it only ever really goes up, right?
And then, in the last few months of 2018, we all got a rather unpleasant surprise:
How are you even supposed to react to this unpleasant and very unusual (at least, for the last 10 years) change of fortunes?Your 401(k) Has Betrayed You
Most of my clients have 401(k)s that theyâve been blindly saving to for years now.
What Iâd like to present to you is simply a different perspective on the losses in the stock market.If you were buying stocks in September (and, if you have a 401(k), you almost certainly were), why oh why would you stop buying them now, when theyâre cheaper?
So, to keep it short and sweet:
Keep saving and investing in your 401(k) and other investment accounts, just as you were 6 months ago or a year ago.[On Wasting Now Money Right Stop You Can Things 4 Your].I simply want to illustrate the perspective that many of my clients (and many of you!) might have on your company stock versus the stock market in general.] What You Should Do at This Point
Youâve probably read all the Very Reasonable and Prudent advice about âDonât do anything.Second is that itâs comfortable to invest in stocks when stocks Only Go Up.
But letâs take the Vanguard Target Retirement 2040 fund as an example.If your company stock goes down, ainât nothinâ offsetting that fall.[Offline Marketing Sales Useful Strategies Boost To Business]
Why has it been so easy? Well, first reason is my superior persuasion skills.Orrrr, of course, it might be making things even worse for you. Concentrated holdings in the same company that pays you your salary (and possibly that affects the value of your home, as might be the case if you live in Seattle and work for Amazon) is extra de-duperty risky, as any faltering in company performance might simultaneously pummel your investment portfolio, the value of your home, and your ability to earn money.[To Book Contest Win Enter ] You can intentionally sell investments at a loss to reduce your taxes, a.k.a.Also, I must note, that while the stock market has fallen in value, it has had far larger losses in the past, so you’ll eventually have to deal with one of those “far larger losses” yourself.
Youâd rather buy a shirt when itâs on sale, right? So, youâre better off buying stocks when theyâre on sale.The founder of Vanguard.I encourageÂ you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation.That is, that you can lose much, most, or all of that money…and are you okay with how that will affect your finances and your life?
The fact that some tech-company stocks have done particularly well or particularly poorly in the last year doesnât affect that fact or that strategy at all.The creator of the first index fund.Now it costs (as of January 14, 2019) about $132.[Start How 2019 Jump SMC To The Money Challenge Your Money Goals With] How long have you been paying attention to your investments, or to the stock market? Has it been only for the last few years, or, maybe only since 2009? 2009, by the way, is otherwise known as the bottom of the market during the Great Recession.And also perhaps questioning my judgment: âYou want me to sell my company stock? But, but…itâs kicking butt!â So, it turns out that some tech companies and their stock are cushioning the investment blow for some of my clients and maybe for you, too.Sometimes itâs perfectly fine to hold significant amounts of company stock…as long as you understand what can happen.During 2018.) But what Iâd love for you to take away from this (and what I hope my clients do, too) is that This changes nothing about how you should treat your company stock.Donât go to cash.â So, I wonât belabor that point because, well, itâs been thoroughly belabored already.
How long have you been paying attention to your investments, or to the stock market? Has it been only for the last few years, or, maybe only since 2009?
2009, by the way, is otherwise known as the bottom of the market during the Great Recession.And also perhaps questioning my judgment: âYou want me to sell my company stock? But, but…itâs kicking butt!â
So, it turns out that some tech companies and their stock are cushioning the investment blow for some of my clients and maybe for you, too.Sometimes itâs perfectly fine to hold significant amounts of company stock…as long as you understand what can happen.During 2018.)
But what Iâd love for you to take away from this (and what I hope my clients do, too) is that
This changes nothing about how you should treat your company stock.Donât go to cash.â So, I wonât belabor that point because, well, itâs been thoroughly belabored already.
The post What? You mean my 401(k) can go DOWN? Well, I never… appeared first on Flow Financial Planning.[UltraFICO YOUR Boost Score The The Score Best Credit Way Is To]<âtax-loss harvesting.â
Keep in mind, though, that tactics such as these are simply a thin layer of icing on the Cookâs Illustrated Sour Cream Chocolate Bundt CakeÂ of continuing to save and invest and otherwise not touching your investing.And a man with a mission to improve the financial industry for regular investors, like you and me.Now, I didnât come up with this perspective, itâs just one of my favorite ones.
[Note: Now, I know Iâm committing felony-level #chartcrimes here by having different time frames for most of these charts.[More 8220It Parenting My No I8217m Mindset Better8221 Gets Changing 8211]
After the stock market falls in value, itâs as if stocks are on sale.Obvs.Read the fullÂ Disclaimer.