I missed posting this in the middle of the month; I wanted to get some articles posted last week that I felt were more interesting. I did manage to grab a snap shot of my accounts from the 15th. With the stock market dropping like a ball on New Year’s Eve, I knew it wasn’t going to pretty. Last month my net worth was $219K. This month, my net worth is $213K.
Here is a quick breakdown of what happened:
- My retirement accounts got hit to a $5,000 loss. If I were still working steady and contributing to a 401k, I would actually be excited about this drop in the market as a good buying opportunity.
- The value of the home equity in my “investment” property dropped $3,000. The other condos in the complex are as cheap as I’ve ever seen them. The property is worth about 10% less than when I bought it in 2005. (For those unfamiliar with my investment property, I bought it as my primary residence, but life intervened and I moved leaving me the option of renting at cost or selling at a loss. I chose to rent at cost.
While I didn’t expect my net worth to grow under the circumstances (I’m not maximizing my income potential), I thought I would still gain each month. I’m much too reliant on the stock market and the real estate markets for growth. In the past these have been good places to invest and I believe that will continue.
Just be glad it’s only 5k… I’m basically back to where I was at the beginning of last year (this includes what I contributed last year). Luckily, I’m not retiring anytime soon.
Have you maxed out your IRA contributions for 2007 and 2008? Just a thought if you are looking to take advantage of the recent market tank…
Lazy Man says
I need to max out both 2007 and 2008. I have to look at the cash that I have on the sidelines. There’s more talk about it later today, but I recently invested $5000 in another area that wasn’t eligible for my Roth IRA.
Llama Money says
Being reliant on the stock market isn’t a bad thing at all. If you were drawing your income from the market, then the drop would be a concern. But you’re talking about retirement and long-term investments. If they go down, no worries. You won’t see that money for years and years anyway.
Money Management and You says
The stock market has taken a turn for the worse up here in Canada too. But real estate has stayed fairly strong.
This recession should however create some very lucrative buying opportunities. I think that soon it will be the prime time to leverage money and invest it in the market.
I think perhaps buying chinese stocks and currency may be the best way to go.
Maxing out your ROTH in one foul swoop is pretty risky. What if the market drops 2000 points tomorrow? If you space your your contributions throughout the year, you divide up your risk.
Lazy Man says
I don’t mind what happens to the market tomorrow, when I don’t plan to access the money for 30+ years. The only thing that I miss with that 2000 point drop is a better buying opportunity. I don’t consider that actual risk.
And when was the last time the market dropped 2000 points? It dropped 450 point yesterday – for about 30 minutes.