One Year Anniversary / Non-Apology

You regular readers may have noticed a significant lag-time since my last posting. Since I find it tacky and irrelevant to linger on this with a lengthy apology, you may consider this brief paragraph my non-apology for taking so long to update my blog. People get busy; it happens.

Now, on to business: I have reached the one-year mark as an investor, and I have a status update and some lessons-learned during my first year of investing for my wife's and my futures. Since I am not feeling inspired enough this morning to make a well-formed essay out of this, I will begin with a simple retirement fund update:


Roth IRA:

EFA (Euro-Asia Index ETF): 9.2381 shares @ $71.94/share = $664.59
IWM (Russell 2000 Index ETF): 9.7119 shares @ $70.56/share = $685.27
SPY (S&P 500 SPDRs Index ETF): 4.529 shares @ $136.15/share = $616.62
Money Market Fund: $50.35

Taxable Investment Account:

AAV (Advantage Energy Income Fund): 8.9718 shares @ $10.74/share = $96.36

University 403(b):

UC Pathway 2040 Mutual Fund (PDF File): 112.383 shares @ $12.39/share = $1392.15

University DCP:

UC Pathway 2040 Mutual Fund (PDF File): 79.559 shares @ $12.39/share = $985.54


Grand Total = $4440.53


If you are a regular reader, you will notice that my account balances have decreased a bit since my last update on December 1, 2007 (at which time my grand total was $5029.08). This is due to two central factors, the most significant of which is that the holidays demanded more of my money than I had planned, so I robbed my Roth IRA of my holdings in the dividend fund PEY. This lowered my account balance by $700 or so, resulting also in a $70 IRS penalty for an early IRA distribution. The second factor is the market downturn of the last few months, which is evident by the price per share of my various holdings. But the good news is that I have managed to squirrel away $4440.53 in the course of a year, which makes the $700 I had to withdraw seem not to bad by comparison (especially considering this was my first go-around as a beginning investor).

So what lessons can be drawn from the above situation and from looking back at the past year? First, the fact that I needed to withdraw money from my Roth IRA points to the fact that I did not, and do not still, have enough set aside for the purpose of an emergency fund. If I would have had a designated emergency fund, then I would not have had to rob from my retirement plan to make ends meet. So in the future, I must take actions to create an emergency fund in addition to my contributions to my retirement plans. After all, a retirement account serves little purpose if one must constantly withdraw funds to pay for regular or unexpected expenses.

Another lesson that can be drawn from the above situation is this: it is important to remember that the value of a long-term investment account will fluctuate widely in the short-term. It would be easy to panic when seeing a market downturn such as the most recent downturn and to withdraw the funds entirely. One must have the discipline to keep his (or her) money invested for the long-haul, regardless of short-term trends (or even trends of just a few years, for that matter!). It would even be a good idea to invest more than usual after a downturn on the relatively safe prediction that the market will again go up in the long run, as it has over the past several decades. On that note, I think I will make an extra contribution to my Roth IRA (and my new emergency fund, per my own advice above) just as soon as I am finished with this blog entry; to put my money where my mouth is, so to speak.

A tangential lesson over the past year is a lesson not in finance but in blogging. I began this blog in January 2007 with exactly zero knowledge on the subject of retirement investing. Since then, as my site's search statistics indicate, people have begun to use this blog as a source of investing advice and knowledge. While it is worth noting that I am not a qualified financial adviser, I can say that I have learned a great deal about how to set up a basic investment account for the proverbial everyman requiring a minimum of complexity and a promise of long-term rewards. That being said, I am excited to have become something of a lay-expert in the field of personal finance and investing, and I am grateful to all my readers who continue to look to my site as a source of information and inspiration to better their individual financial situations. 2007 was a very productive year for me financially, and 2008 should be even better, especially with the broad market indices (and their corresponding ETFs) on sale right now.

And finally, if you have not yet taken the time to subscribe to this site's RSS feed, you may do so by clicking on the button () in the right-hand column or by clicking here. Best of luck, and happy investing!