Our family finances have just hit another major financial milestone. Our investments have now surpassed $400,000 in value! This includes money in our 401Ks, Roth IRAs, taxable accounts, and 529. This does not include money in our checking accounts, savings accounts, home equity or rental property equity.
We track all of our investments with Mint and Personal Capital. We manually track our spending with ClearCheckbook.
Even with the recent stock market volatility, our investments continue to produce a healthy amount of returns. A little over a year ago, I shared how our investments surpassed $300,000 in value (June 5th, 2017). Four years ago was when our investments first surpassed $100,000 in value (June 2nd, 2014). It’s incredible watching these investments compound. There are days where investment returns exceed an entire paycheck. Most of our investing occurs automatically and involve very little maintenance.
We continue to steadily invest in our 401Ks, IRAs, taxable accounts and 529. Sometimes we contribute as little as $50 at a time. When it comes to saving for our future, the most important thing we do is consistently invest - no matter how the stock market is doing. When we reach financial freedom, we want to look back and thank our past selves.
We are Bogleheads and our investment policy is quite simple. We invest in index funds, which allow us to easily diversify our investments with very low costs. We stay the course with our investments and never try to time the market. We make steady contributions through stock market highs and lows.
We currently aim to have around 90% of our investments in stocks (70% US, 30% international) and 10% in bonds. As we get closer to financial freedom, we will gradually reduce our exposure to stocks and increase our bond allocation.
There’s been a lot of talk from financial pundits saying that a stock market crash (>30% loss), correction (10% loss) or lower expected returns are coming up. I’m sure one of these events will happen someday – maybe even this week. Many investors are sitting on the sidelines with their cash, since they don’t want to buy at a market peak.
The problem is that there is no way to predict the future with certainty. When losses in the stock market occur, they have historically been followed by a recovery and then yet another all time high. The stock market can also move sideways for many years. Over the long run, the market always goes up. Staying in the market long term allows your investments to continue compounding. Your time in the market is much more valuable than trying to time the market. The important thing is to have an investment plan and stick to it. Don’t believe me? Read about Bob, the world’s worst market timer.
We focus on the things that we can control, such as steady contributions, diversification and low investment costs. In addition to consistently investing towards our financial freedom, we try to focus on pursuing a life of meaning and happiness. If you don’t find happiness now, you’re not going to find it when you reach financial freedom.
How are your investments coming along?