Thursday, October 2, 2008

Analyzing my net worth for September 2008

Well, no surprise--my net worth took a hit. Like all of you that have invested in the stock market especially mutual funds, I have lost value in my 401(k) and Roth IRA. In fact, I lost nearly 4% of my net worth compared to August 2008 and nearly all the decrease was due to stock market fluctuations.

Not to belabor the point, but here is the breakdown:

Stock market volatility
The whole stock market is too reactionary to be anything but wild. September had the biggest one day drop in points, 777 points from the Dow, and only had a few days left in the month to make it up. With the overall market behavior, my mutual fund portfolio reflected the downward trend of the stock market. I have nearly 30 years to gain back these losses and I will likely need all the time I can get. Investing in mutual funds is a gamble and September reminded me that yes, it can not only go down, but can do it in a dramatic fashion.

Savings and cash
I gained some here, but not enough to counter the retirement fund losses. I bolstered my Emigrant Direct high yield savings account with another $400 and moved $1,500 I was saving for the replacement car into a 12-month CD at ING Direct, giving me a 4% APY. Any interest gains I can make, I will take! Future plans include boosting CD funds when they mature and adding a new CD to the mix so I have one maturing each month. These are not a true ladder, but three 3-month CDs staggered to give me higher interest than my savings account, but make them a bit more accessible. In addition, I saved almost $37 from my spending plan to add to my savings accounts and hope to add more in the next few months.

My losses are probably greater than I know now. My rollover IRA probably took a hit in September as well, but will not get the statement until October. I want to focus on my level of savings and bolster my cash position as much as possible. While I am far from panic mode over the Wall Street/bailout controversy, I feel it prudent to be more conservative in my spending. A possible second job is being considered and hoping I can save more money toward future dreams as well as present considerations.

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