The new Money Magazine arrived the other day and I quickly found two surprises in it. Well, this is embarrassing… I was actually reading an old Money Magazine that my kids shuffled around. Still, most of this article holds.
The first was the Cialis postcard. I think Kiplinger’s has a few cards that fall out of the magazine, but they are typically renewals and stuff like that. I don’t remember the cards being advertisements. I understand that the print media business isn’t doing well, but this seems a lot like when cinemas started to show advertisements before the movies. I’ve got enough advertising in my life*… when I pay you money, please don’t give me any more. And the advertisement should probably be a financial services company. Without getting too personal this is poorly targeted and I have to wonder how Cialis has the money to throw in the trash like this**. One last thing about advertisements…
Okay, with that out of the way, we can move on to the second surprise. It’s a little less interesting than the first, but it might matter a lot more to you. I was reading the Editor’s Note by Diane Harris and stopped at this:
“The cardinal rule of long-term investing is not to get caught up in the daily, weekly, or even monthly vagaries of the market.”
This was in the context of Ms. Harris saying that she checked her 401(k) balance during the summer slide in stocks.
That cardinal rule certainly makes sense. I love to let the stock market do it’s thing and I’m a long-term investor. However, the other side of it is that tracking our net worth has made a (positive) world of change in our finances. Maybe it didn’t do it directly, but there’s a clear correlation. What’s the old saying, “What gets measured gets improved?”
I realize that investing and net worth are two different things, but I think for many Money readers they are likely to be the same. These are people (like you and me!) who have been maxing out their 401ks and Roth IRAs to the best of their ability.
I recommend that people check their net worth monthly (side plug: the FREE software at Personal Capital is great at this!***). This means being exposed to the monthly vagaries of the market.
If you were looking for a definitive answer here, I don’t have one. I’d like to hear your thoughts below. Do you track your net worth? If so, do the vagaries of the stock market influence you?
* I realize the irony here of course, but at least you are paying any money.
** Well, I won’t wonder because healthcare is well… healthcare.
*** I may receive a few dollars if you sign up for Personal Capital.
The Digerati Life says
I’ve tracked it since 1990 but you know, I was a wee young ‘un then. I’m also addicted to charts, graphs, spreadsheets and tools so I had to find an excuse for using all that stuff. ;)
Turning Point Money says
Checking your net worth month after month is very valuable to build motivation and understand how you are performing.
Watching the ups and downs of your Berkshire Hathaway holding day after day will likely only give you motivation to sell.
Better to check on things quarterly or annually if you are invested in long term holdings.
When I was young and my net worth was in five figures, I used Microsoft Money at least monthly. (note that Money was discontinued in 2009).
I’m a little bit older now and I (singular) keep track of our (plural) net worth on quarter-by-quarter basis. Not infrequently I cheat and check our balances mid-quarter. If it’s up, I enter it in our google spreadsheet; if it’s down I reset to our previous quarter’s ending value. Either way I try (however in vainly) to not take it too seriously.
So far we’ve had down quarters but never a down year. As investment gains and losses grow faster than contributions, the latter (a down year) seems like something that will happen sooner or later. I don’t know yet how we will respond.
Lazy Man says
I’ve found myself doing monthly updates myself now. However, I feel that’s largely because the market has been going up. If I go back 5 years ago, I think it was more towards every quarter. There’s certainly a “things are good, so I want to document this good news to feel awesome” vibe going on. I’m hoping that with real estate and income, we won’t have a down year, but you never know. I should go back and look at 2008.
I’m hoping that if a down year does happen, I will be able to respond with, “Well, we had a lot of really good ones, so let’s accept this and get back to good years again.”
I’ve been doing monthly updates for years. I enjoy it probably because the market has been doing so well. It’s a habit now so I’ll keep it up through the ups and downs.
Now that I’ve been investing for 20 years, I’m sure I’ll see some opportunities when the market goes down.
Revanche @ A Gai Shan Life says
I track monthly but I also don’t put too much stock in the changes in the stock market. My focus is on the things we do control – active savings, contributions to investing accounts, not spending so damn much. There’s no way I’d do a good job with all of the above if I didn’t track!
Lazy Man says
I think this sums up my feelings on the topic. I like to focus on the things that I control, but those things are overwhelmed by the things you do not control at a certain net worth. It’s great when those move in a positive direction. If the overwhelming thing doesn’t go in that positive direction, it’s going to be hard to see the things that we control. It’s possible, but hard.