Are you buying, selling, or holding?

[34saving]

I've been investing my Roth money in an eTrade account for 6 or so years now. Until this February I let it sit in cash. (Life had me thinking about other things.) Anyway, as of this February I started investing it slowly in mutual funds and a few well (I think) selected stocks. Most of it is still in cash. However, my cash is well outperforming almost all of my investments. Why? Seems pretty obvious that the overall market keeps going down. So, do I keep investing realizing that this is a time for "bargain hunting" or do I stick with cash which, at least, doesn't decrease in value and wait for better times? BTW, retirement is 30 - 35 years out for me.

[terry1156]

With a 35 year outlook, I would continue to place the money into stocks with your IRA. I don't know how much research you put into the funds and stocks you have, but if you don't and are just going on gutt feeling, I would consider putting it into an index fund. Mainly because they have much smaller fees than mutual funds do for the most part and it gives you a broad selection of the stocks in the market.

[jmjj215]

Along w/ Terry's advice, consider the fact that you keep purchasing while the market is going down. That's not a bad thing when you're in it for the long haul b/c you expect the market to rise in the next 35 years. So while everyone would like to buy low and sell high, you have to remember that for every person that buys low, someone is selling low, and the opposite of course. The stock market is zero sum in that regard. So keep on investing in (well researched) mutual funds or an index as Terry suggested. You'll be getting your shares cheaper, which gives you a potentially higher upside.

Of course, there are so many other factors. But the gist of it is that if you invest regularly (every month auto withdrawal) for 35 years, this dollar-cost averaging (buying high at times, buying low at times) turns out to be a pretty powerful way of investing your money. And you can sleep at night b/c you aren't worrying about timing the market.

Wow - sorry this is so long!

[34saving]

It's good to be reassured on what I already (intellectually -- not emotionally!) knew. I think I'm going to have to check things once a week or once a month. Maybe I won't go quite as insane on down days then

[robby]

Originally Posted by jmjj215

Along w/ Terry's advice, consider the fact that you keep purchasing while the market is going down.

Yes, you don't want the stock market to be high now and low later when you sell. You have to think of it in those terms and in those terms, it is the best time to be buying.

[34saving]

Emotional bonus -- In the last two days (with the market doing very well) my Roth is finally ahead of where it was when I started investing. I know it's just an emotional boost, but hey, I'll take it

[Tree0164]

Investing shouldn't be emotional but it is. Also do not look at your accounts every day or it will drive you crazy.

Look at your quarterly statements be informed. I do mutual funds rather than individual stocks. I know what catergories that I would like to be in and let the mutual fund managers make those decision. They are much more informed than I am about those things.

[jmjj215]

It can almost be addictive to track the market. It rarely brings anything useful to the table as far as investing decisions are concerned though. I agree with Tree0164 - try and limit the time you spend fretting about your investments and instead focus that energy/time on learning about investing OR playing soccer or something

[baselle]

Plan your work, and work your plan, 34saving.

Don't be afraid of cash; it is doing better (and is safer) than anything else right now. But I can guarantee that that won't be the case throughout the next 35 years. Since you are in a great buy-and-hold let-time-work-for-you situation, investing small amounts broadly and monthly forever is going to work well.

Whatever you hold in cash you should try to maximize the interest rate. A little fixed income should keep you from freaking out when Mr. Market freaks out. Something will be going up when stocks go down.

And treat stocks (equities) how they should be treated--as a bits of equity ownership in a company. Substitute "apple" for stock. If you're in a grocery store and apples are on your list, don't you want to buy more when apples are on sale?

Remember to control the things you can control. Fees, for instance. If you're in a basic index fund, the fees should be as low as possible. In this investment climate, the investment banks make more money in the fees they take out of your account than they do in making decent stock picks.