Shares, not dollars: this is my way mantra to cope with Mr. Market’s relentless assault on my retirement portfolio.
Looking at the value of my retirement holdings is an exercise in self-inflicted pain. I don’t plan to decrease my investments OR to adjust my overall fairly aggressive asset allocation, but that doesn’t mean I don’t grimace a little over a 30% drop in the value of my contributions.
But – if I just change my perspective a bit, and turn my focus from dollars to number of shares, this downturn has been great! I’m picking up shares at all kinds of discounts. At the beginning of 2008, $5,000 bought maybe ~170 shares in my funds. Now, $5,000 can buy ~240 shares. 170 vs. 240 = HUGE difference.
The expectation, of course, is that these shares will (over the long run) grow in value. Capitalism is the essential exercise in optimism – the optimism that things will keep getting better, that productivity will increase, that people will prosper. That’s why I buy into America (literally, I buy America – well, the U.S. market index, anyway).
Of course, shares can lose most -or all- of its value (exhibits A, B, and C). But I don’t hold any individual stocks. In addition to the U.S. market index, I hold an international index and a bond index.
So, if my shares become worthless, the world has probably gone to hell in a hand basket. At that point, retirement will be the least of my worries. I’ll probably be foraging for berries and hunting small rodents for sustenance.
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I only started contributing to my retirement (401k & Roth IRA) in October – but I look at it the same way.
I am glad we are 20somethings during all of this…
haaaaa, berries and rodents!
I took exactly this mindset back in March of last year (wow, didn’t realize it had been that long!). Thus, I can gleefully say I’ve picked up 240 various shares since then in my funds and if the market were to return to the share prices of that day, I’d have a 22% return because of those extra shares!
Never mind that I’m currently down 22% from my original contributions. At least it isn’t the sad, sad 31.4% from November 18th!
Also, I clearly need to get a life.
I have to remind myself that these are shares, too. Like Money Mous, I just started investing (September of 2007). It hurts to be doing something so proactive and seeing negative results, but all my PF blogs have kept my mindset in check. I just have to think about the long run and realize what an opportunity this is to pick up lots of shares for very cheap!
Since I’m no longer contributing to my accounts, my investments are just plummeting….the amount of shares I own is not really making me feel any better. I actually just feel worse for not being able to contribute to my accounts.
I need to start using this mindset! Watching the value of my investments slide steadily downward is depressing and it is hard to stay optimistic in this environment. I have invested in some really hard hit funds, but hey at least shares are cheap! Sadly I am buying shares for less than what I paid 8 or 9 years ago, that is how far we’ve fallen.