Get the Big Things Right

I did something dumb and irrational with my investments last week. Before I embarrass myself, let me say that I get the big things right, and it’s the big things that matter.

I have a mortgage on a house that I can afford. My car situation, while not great and will expound on in a separate post, is fine.

Let’s talk about my investments. I max out my 401(k) and don’t play any games in that account. I can’t touch that money for twenty-plus more years, and I treat it as such. Very little tinkering. No cash or market timing. Stocks for the long-run type mentality. I may not be 100% market cap-weighted index funds, but I still think Jack Bogle would approve.

Every year I make a chunky contribution to my SEP IRA. This is where I own individual stocks. My primary goal for this is making money first, entertainment second, and beating the market last. I have no delusions that I will beat the S&P 500 doing this over the long run, but I enjoy it, and it keeps me engaged. There will probably come a time when I give up on this, but for now, I still like it, and the stakes aren’t that high where trailing the market would hurt me in any meaningful way.

I also have a taxable brokerage account that I contribute monthly to. That’s in our Good Advice platform, where I’m putting the money to work buying stocks every month come hell or high water.

I have more than enough cash in a high-yield savings account, and my kid’s 529 plans are on track.

Like I said, I got the big things right.

Now let’s talk about where things got stupid. I transferred some money out of my high-yield savings to speculate on stocks. Shocker, it didn’t work. I turned $40k into $35k and said, this is just dumb, I have no interest in short-term trading, let’s move the money into something else. That something else was crypto, which you might think is equally dumb. You might even stop reading. I think the asset class is going higher even if I don’t share many of the same principles with its most fervent evangelists.

Now this is the irrational part, and part of what makes us human and investing hard. I could have kept the remaining $35k in my brokerage account and bought a Bitcoin ETF, but I like compartmentalizing my investments. I buy and hold indexes in my 401(k), I buy individual stocks in my SEP IRA, and I buy and hold Crypto in my Robinhood account. Also not ideal, but whatever. So while I was waiting for the cash in my brokerage account to settle, T+2 (OH THE IRONY), Bitcoin ran from 42k to 50k. Now, there’s no way I could have known this was going to happen. The dumb part is that money is money. Why does it matter if the $35k was sitting in an ETF in my brokerage account or with my other Crypto in the Robinhood account? It doesn’t, and I paid for that mistake.

It would be fun to pretend that as somebody who does this for a living, my track record is pristine and I never make mistakes. While I’m far from perfect, I’ve done pretty well getting the big things right while avoiding the Big Mistakes that ruin too many investors.

We’re all human. Don’t be too hard on yourself when you try and break even on a stock but watch it drip lower, or when you decide not to buy a stock and then watch it rip higher. These things happen to everyone.

Ben and I had a fun conversation with Jared Dillian about financial stress in his new book No Worries: How to Live a Stress Free Financial Life. Jared’s book goes against the grain of traditional financial advice like don’t drink coffee and clip coupons. Jared’s belief, which I agree with, is that small luxuries are part of living a rich life. Avoid big luxuries, and enjoy the small ones.

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