Wednesday 12 August 2020

Reflections On Saving In The Market

I am not a financial expert, nor have I ever claimed to be, I am just an average guy trying to figure out the best way to better my financial position.

I do that by managing and mastering my cash flow so that (usually) 80 – 90% of my take home pay goes into savings (no I don’t make a billion dollars).

I save not through a typical savings account, as they are paying crap for interest rates at this point. 

That means that to get any kind of return or growth of your savings you have to look for other ways of saving.

One way of doing that is saving in the market. What that means is to buy stocks, hold on to them until you need to “withdraw” cash from the market by selling them.

The growth you see in this type of savings vehicle is: 1) the value of the stock itself and 2) the dividend the company pays you for owning the stock.

Since the (stock) market fluctuates based on any number of things (mainly investor confidence and other gut feelings) that means that your “savings” will go up and down considerably.

It is far too easy to get caught up in the “what is my savings worth now” game. I know, I have been there and done that. 

I do check my portfolio daily, but mainly this is to see what transactions or payments have gone through and if there are any transactions that are unexpected or fraudulent hitting any of my financial accounts.

If is interesting to see what the value of my various investment vehicles are worth today . . . right now. 

What I have found is that the value of them in the moment is not that important . . . interesting and something to keep an eye on, but not vital.

If and when the value of your stock or other investment vehicle starts to drop, there is not much you can do about it.

If you do try to get online and sell it, typically you will find the system is slow to the point of almost crashing (because every other nervous investor is wanting to sell at that moment too).

So, unless you desperately need the money now, or are certain that the stock will crash, or the company will go bust, hang on and wait for it to go back up.

If and when the stock is down, consider that a buying opportunity.

Again, when it comes to investing and what to do with your money, you make the best decision on what to do for yourself: what are you comfortable with.

I choose to take the longer look at these investments and just try to hold on for the ride. At least that is my philosophy.

As always: Keep your head up, your attitude positive, and keep moving forward!

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