Between September 9 and September 30 I lost $2,219. It’s gone. Vanished into thin air. Like it never existed.
Apparently the stock market took a little bit of a dive over the last few weeks. I didn’t really notice because, well, I honestly don’t pay much attention to the news. But I do take 5 minutes each week to mark down how our investments are doing (mostly because it will be interesting to look at years down the road), and this week I couldn’t help but notice the sharp decline.
Our retirement savings, once flush with cash, are now a little bit lighter. Three weeks ago we were closer to financial independence than we are today.
But to be honest with you, I couldn’t care less. That $2,219 means nothing to me.
It’s future money
The money we lost is all in retirement accounts. A Roth IRA for me, both a Roth and Traditional IRA for my wife. There’s also some in a regular old taxable account, but that money is also earmarked for retirement.
We don’t have any plans to use that money any time soon. It’s all future money. It’s purpose right now is to sit tight and ride the waves of the stock market, hopefully growing over time so we can use it decades down the road.
If I needed the money tomorrow, I might be freaking out. But since I don’t need it for another 30 years or so, it doesn’t phase me in the slightest.
But then again, if I needed the money tomorrow it wouldn’t be invested in the stock market. That’s why I keep things like my emergency fund and my irregular expenses funds in savings accounts. They don’t earn a ton of interest, but I do know for sure that the money will be there tomorrow if I need it.
My today money is kept out of harm’s way. But my future money? Well to be honest it’s hard to care all that much about losing a little bit when it’s still so long before I can even use it.
The stock market does this all the time
This isn’t the first time the stock market has taken a dive and it certainly won’t be the last. Heck, this isn’t even the first time it’s happened this year.
Back in late January we lost $2,041 in just two weeks. And if we go back to June 2013 we lost $1,935 in a single week. Talk about bad!
Here’s the thing: the stock market goes up and down. That’s just what it does. Some weeks, like the past few, will be bad. You might lose a few thousand dollars in a short period of time.
Other weeks will be great. Actually, I don’t have to go all that far back to find one of those good periods. Between August 7 and September 1 the value of our retirement accounts increased by $2,431. That’s actually more than what we just lost, and it happened right beforehand!
The stock market falling is not a cause for alarm. The stock market rising is not a sign of great things to come. Both happen all of the time and neither one gets me excited.
We have a plan
My wife and I have an investment plan. You can read all about it here: My Personal Investment Plan.
Our plan defines what we’re investing in and how much we’re investing in it. That’s it. It doesn’t say anything about reacting to what the stock market is doing this week or any other week.
Without a plan, I might be worried about what I should do now that the stock market has fallen a little bit. Without direction, I wouldn’t know what step to take next and it would be harder to resist the call to panic.
But because we have a plan, and because it’s clear on what we do and don’t care about, it becomes easy to simply not worry about the things we don’t care about. Our plan doesn’t care what the stock market is doing, so I’m free to not care about it either.
If you would like some help making your own investment plan, I would check out this resource I put together for just that purpose: The New Parent’s Guide to Investing.
Or if you would like a little more personal guidance, you can click here to learn more about how I work 1-on-1 with clients to make a plan that fits their personal goals.
Care less = more free
I could lose another $2,000 this week. I could gain $5,000 instead. Those are big sums of money, money that could pay several months of rent, or decades worth of cell phone bills.
But I wouldn’t care either way. We’re investing for the long-term, so the short-term swings simply don’t mean anything to me. I’m free to care less about the stock market, which makes me free to care more about the things that actually matter to me.
It’s a nice place to be.