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August 1, 2005
Portfolio Update
I discovered something I didn't know this week. On Friday my time was short and the bond market was crashing, so I did a 100% transfer of my money market money into bonds instead of a specific dollar amount. Interestingly Friday was also the pay day deposit of my regular contributions. Well since I used 100% instead of dollar amount it put it all in at the same time. I've never actually done that before and I guess if I had thought about it, it would have been a logical thing to expect. I didn't even think about it. Friday was a really bad day. I lost money everywhere at once, but I got a dividend for all my bonds which is always nice combined with the fact that my paycheck actually went in on a day when the market was massively down, the loss should be easily made up with any positive forward progress. Also add in a 2% increase in funds that also increases my divisor, which decreases my percentage progress as well and I still only lost 3 tenths of a percent. More importantly I've gotten my bond percentages back above 45% which was starting to really bother me, too much stock exposure. I'd feel a lot more comfortable with the percentages being reversed, but my instincts tell me to keep moving towards a 50/50 split. More importantly I'm trying to maintain the 1 to 3 ratio of shares of stock funds verses bond funds (I'm actually at 1 to 3.43) I've also started doing the math on taking out another loan against the money in January to pay off my student loans whose rates quadrupled because of Republican manipulation. I never could find a rational reason to put money into a 401k until I realized that I could get guaranteed growth by paying myself interest on things I was going to pay interest on anyway. Between loans and outsmarting the Republicans my money has been growing at nice rate of 5% a year. I'm still not clear on why people don't want to do the 401k thing. Sadly I've already surpassed the average savings of people a decade older than me. Of course I was smart enough to do the math that exposes a loophole with the loans to allow you to put in more than the federal limits. Some people whine about the after-tax dollars you're spending. Blah blah blah. The growth is tax deferred from that point on. You can effectively max out your yearly contributions while taking the largest loan possible adding another 20% onto the federal limits (assuming a 7% rate on the loan). Even if you just left the money in the bank and paid it back without spending a dime of it (in a nice ING savings account it could draw 3.15% compounded monthly would lower that actual rate) and consider the interest to be your only real cost (effectively an virtual after tax contribution that you don't have to pay taxes on in the future.) And you can do that every year for the rest of your life, but it's such a terrible idea! What a bunch of idiots! It's a terrible idea to invest in yourself, but a great idea to invest in their terrible funds with negative returns when you could invest with a guaranteed rate of return. When I read the Fidelity warnings and cautions it just gives me a headache. The problem with people being involved in retirement programs is the investment organizations and nothing to do with people not understanding the process. I guess I should really write up a separate blog post about the new 401k's that they are introducing that will force workers to invest money into. That's going to be a really bad idea.
This Weeks Actual Percentage: +5.637%
Last Weeks Actual Percentage: +5.944%
Best weekly percentage: +7.437%
Personal Rate of Return according to Fidelity for This Week: 11.6%
Personal Rate of Return according to Fidelity Last Week: 11.7%
Current Asset Allocation:
52.25% Stock
47.75% Bond
00.00% Savings
Posted by ManDrake at August 1, 2005 10:08 AM
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