Did The Market Crash Yet?

At the time I am writing this, my meagre little investment account (started about seven months ago) has been in the red for a while, ever since the market took a bit of a dive about a month ago.

Mr. E’s account has been the same. A small, initial fall, and then a steady walk downwards.

There was one full month where my investments increased as much as my student loan interest per month. That was a good one. A net-zero, if only for a little while.

But now we watch the red, and I am happy that I not only transfer automatically, but recently also started telling the website we use (Nordic Nordnet) what % of my automatic withdrawal I want invested in which index funds.

The Investment Policy

All right, I’ll be perfectly honest, I have not actually, physically written out an investment policy yet. But it was after this post by Liz, the amazing Chief Mom Officer that I finally stopped allocating money manually every single month.

While allocating manually was sort of fun for my budding investment mind, it also meant I had to think about how and where to allocate every single month, draining on my limited decision making potential.

Instead I opted to do that thinking once, tell the system, and then reassess in a year or so. The only “work” left for me is to log in to update my net worth every month, and perhaps, if I am feeling extra crazy, up my monthly automatic transfer once I’ve filled up my tax advantaged mortgage savings account and stocked up our emergency fund.

I will admit, I do feel tempted to add extra funds now that the market is in the red (woo, sale!). But although I have not fleshed out a full investment policy, I did take the time to write a seven step priority list for the year.

Sadly for my investment eager brain, there are other priorities higher up on the list before I am allowed to increase my monthly contributions. Boo.

2018 Priorities:

  1. 1 month emergency fund (March 2018)
  2. Fill up mortgage savings account (soon, April 2018!)
  3. 2.5 months emergency fund
  4. Round up mortgage savings account to nice, round number
  5. 5 months emergency fund
  6. Did it crash yet? AKA increase investment contributions
  7. Increase payment on student loan debt
  8. 6 months emergency fund/more mortgage savings contributions?

The way I calculated these goals at the beginning of the year, I should not hit the last one until the very end of November/December.

To my checklist-happy brain, that means I get to put goals that are not as mathematically sound, but emotionally rewarding (paying back student loan debt at 2% interest, when market returns are historically much higher), but I do not actually get to spend that much money on them, because I will not get there until the very end of the year.

Money Mistakes

Although this list is not a complete strategy or policy, I cannot begin to tell you how much it helped to write out my priorities like that.

In January, before writing the above, I received my annual student loan statement. I was exasperated to see that over 30% of my payments in 2017 were interest payments, even at my measly 2% total interest.

In the heat of the moment, I scheduled twice my regular monthly payment to my student loan. And while it felt emotionally rewarding and didn’t really hurt me to pay more, it was not the best use of my money.

Far better would have been to put that money into filling the mortgage savings account earlier, enjoying that yummy 3.2% interest on an increased principal amount all the sooner. Not to mention that every penny I put in savings and investments goes towards closing the gap between the interest I pay and the interest I earn.

But Is It Crashing?

Back to the market for a second. Is it crashing yet?

I have no idea, and I have no basis of telling you whether it is or isn’t.

I can tell you what I will do though. I will continue letting my automatic transfers invest my money for me, just in case I get bitten by the “perhaps I should wait” tic. Like many these days, I look at how long ago the 2008 recession was, and am starting to feel like there might just be another one on the horizon.

That means stocking up on the emergency fund, ensuring we have no high interest debt and doing our best to diversify our income. Being in the biggest university cities in Norway, the housing market is hot and not something I want to touch at the moment. Renting is good for me and less maintenance, thank you. Especially with this awesome place where we get a porch with a tiny garden spot on top.

Rainy Day Strategy

Do you have a plan for where your money is going in turn? Or is it all so automated that you don’t even have to think about it any more?

I will admit, I started allocating a little bit to each goal, in such a way that I would hit all of them by the end of the year. But to be honest, I really like reaching goals and ticking them off. I realised it gave me extra pleasure to target each goal in turn and smash them, one at a time.

What does your strategy look like? Do you have your priorities firmly in hand or do you play it by the ear? Do you make detailed strategies and multi-page documents, or do you scribble it down on a napkin and call it a day?

Did The Market Crash Yet_ (1)

10 Comments on “Did The Market Crash Yet?

  1. Hey Kristine! Your list of money goals looks pretty impressive and I am glad to see you are well on track to achieve them.

    As for debt repayment, I rather see it as a 2% instant return which I would still pat my back for (not the absolute number because in India even bank accounts give 3.5% per annum considering the inflation).

    I agree with you and Liz on automating the investments. I think even with good intentions, it’s not always possible to do it manually. I intend to automate my investments in actively managed funds (they still preform much better than the index in India) after May when I expect a salary increment.

    • Thanks Aparna! It doesn’t feel very impressive compared to many of the other bloggers out there, but we all got to start somewhere, right?

      Inflation sure is something to take into account, our market is a bit more stable over here, but it is something I really don’t think I understand enough about yet! Automating made things so much easier. Everything just… works. All I have to do is log the net worth change every month!

  2. Glad to hear the IPS article was helpful! I have a set strategy and financial priorities that don’t change based on market movements. I’ve “lost” quite a bit of paper money in the last quarter, but I’ve been through two downturns before. So I just keep on keeping on! Having a clear set of priorities and a strategy really helps when things get volatile. Looks like you’ve got a great set of goals!

    • It sure helps to see other, more experienced people talking about how it was during the last downturns. It’s all well and good to talk about the theory of what we will do, but if I will feel the same way with a much heavier downturn? I don’t know. So thanks for writing and keeping a clear head!

  3. I like how you stagger your emergency funds goal throughout the year. I have financial priorities but they’re not set like ‘rules’. If circumstances change, I adjust. In 2016, I was 100% debt repayment, emergency fund then investing. The next year became wedding and investing. Now that we’ve lived in the small space for two years and it’s clear we need a bit more space, the focus is on saving for a new place with investing as second priority. If you had talked to me after I had paid off the debt, the plan was 100% investing for the next decade. But life happens 🙂

    As for detailed plans, I looove spreadsheets! So I enjoy spending time calculating differenct scenarios (or mathing shit up as FireCracker likes to say).

    • I think I would quickly become demotivated if I didn’t divide the emergency fund into smaller, faster achieved pieces.

      I would have to agree to the “life happens” comment as well. I would have liked to be 100% investing and mortgage savings after the emergency fund is full, but life is never that easy!

  4. The most recent “guesstimates” in NY have any still-potential Bear Market bottoming out by early next March, followed by a slow, steady recovery. The markets went up yesterday, which is unusual for the last trading day of a business quarter. Most often, investors “celebrate” a quarter’s close- by “Sell-abrating”.

    • Interesting. I did not know about “sell-ebrating”.

      I would be quite happy to se a bottom out and steady recovery next March, as I’ll still have stable employment. With my luck, it’ll probably bottom out as I finish my contract. But speculations will be what they are, I suppose. Quite useless in the real world.

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