Getting my girlfriend excited about saving money!

I was surprised when my door burst open earlier this week and future Mrs. TimeInTheMarket ran in with a sheet in her hand.

“Look,” she said pointing to sheet, “I gained $364 this year!,” she continued with an excited tone to her voice.

I was a bit confused as she had never been one to get excited about money before. We’ve  talked about my portfolio and my desire to retire early in the past but they were never conversations she was too eager to have.

In fact the below cartoon captures her interest in the subject perfectly as resorts to nodding half the time when I start talking finances and eventually just tells me that’s my area of our life to handle, not that I mind!

mutual funds boring comic

In any case, she gave me the paper and I was intrigued to see that it was her simple IRA statement. Were we really going to have a conversation about stocks and retirement accounts that I didn’t start? Continue reading “Getting my girlfriend excited about saving money!”

Going Places – Denver and the eclipse

Going Places – Denver and the eclipse

I’m not a huge traveler but I do like to get out and about every so often. I’d like to two vacations a year, maybe more if the trips are more local. It was actually one of my goals this year as well! The Denver vacation is my 2nd one of the year.

I thought it’d be cool to document some of my trips here on my blog since it doesn’t all have to be financial stuff. After all, life is about more than just money.

If the personal tag didn’t tip you off, this post won’t have anything to do with what I typically write about. I like to write and it just seems reasonable to combine that passion and archive some of my trips on this page.

I went out to Nashville earlier in the year and had fun. The plan was to write a bit about it when I got back but I never go around to it so now that I got back from Denver, Colorado, I have another opportunity to get that started. The Denver trip was a few weeks ago so I’m a bit late to the party but it’s a start!

The idea of heading to Denver was actually spawned by my fiancee’s dad who wanted to go see the total solar eclipse. I’ve wanted to check out Denver for a while and as luck would have it, it was only a few hours away from Wyoming which was in the path of totality.

It wasn’t just my fiancee and I this time around which wasn’t ideal but having three other people around really helped reduce the costs of the trip which was a plus.

One of the nice things about this trip is that my fiancee’s dad actually took care of all the booking which was awesome as I’m typically the one doing all that. He also got tickets for a bus trip on the day of the total solar eclipse so we wouldn’t have to worry about driving there ourselves and finding a good spot.

The visit to Denver wasn’t going to be a long trip since we’re all employed and have certain schedules.

We flew out Friday morning and got there around lunch time and then flew out Wednesday morning so I was back in my own bed by Wednesday night.

The total eclipse was happening on Monday so that day was booked up but the rest of the time was spent exploring Denver and the areas around it. It may seem like a short trip but we tried to jam as much stuff as we could into those days. Continue reading “Going Places – Denver and the eclipse”

Relationships, personal growth and marriage

Relationships, personal growth and marriage

One of my recent posts talked about my engagement and I’ve been thinking about what that means for the past couple of days. Those thoughts have centered around the impact a good relationship can have on your life.

It was only a few years ago that I was in my late 20s, discouraged from the dating rut I was in and expecting to be stuck in that loop of mediocre relationships for a while. There’s something to be said about feeling trapped and the stickiness it brings into the other aspects of your life. Often times when one thing isn’t going well, other things follow suit. In short, one thing failing can make your outlook on other parts of your life change as well. I wasn’t happy in my social/personal life, wasn’t happy with my career and wasn’t even happy with my living situation. I felt like I was failing in my relationships and by default I felt the same way in all other aspects of my life.

Then I met her and everything changed. People often say that their significant other makes them a better person and I never understood what they meant by that until I met and spent time with my now fiancee. She has a lot of great qualities and I immediately knew that there was something different about her when compared to other girls I’ve dated. Most of my prior relationships barely lasted a few months and I honestly expected this one to be the same but things progressed, they moved along and I realized that this was working; it was working pretty damn well.

That internal belief of being stuck in all aspects of my life made no sense to me anymore. I was in my late 20s and living a life I didn’t want to live because I told myself that was the norm. I was depressed, anxious, bored and unhappy.

It took one great person, one good relationship to make me realize that didn’t have to be the case and get my life moving again. If I could succeed in a relationship, I could succeed in other areas of my life as well. That was a pretty key realization in my life that drove me forward in search of bigger and better things. I was no longer stuck in my default loop of mediocre relationships so why should I be stuck in other parts of my life?

I moved to a nicer place; closer to work and amenities which led to a higher quality of life. I never hated my job but found it rather unfulfilling so I took a closer look at my career and pushed myself forward into a different career path; one that I enjoy and one that offers more potential for earnings, personal growth and impact. I began this blog as a way to track my financial progress and push myself forward on my personal projects and through all that I became a better boyfriend to my girlfriend as well. She was the one that brought forth this whole cathartic realization me. Meeting her was the start of a whole new part of my life and now here we are ready to start yet another journey.

Marriage! That’s our dog and bunny up there announcing our upcoming nuptials. I’m excited to continue growing as a person and seeing where the journey takes me from here.  Continue reading “Relationships, personal growth and marriage”


It’s rather interesting how quickly your life plans can change and I came to realize that in a big way this weekend.

My girlfriend and I went for a walk and took the long way to the grocery store afterwards to enjoy some of the views of our beautiful state and also to get a gym(Pokemon Go – we’re nerds).

On the way there, my girlfriend noticed an open house sign on a cute little road in a nice neighborhood and we decided to stop by to take a look.

We had talked about home ownership in the past and I’ve talked about it being in my future on this blog as well but I always thought that future was pretty far off. I love the comfort and low stress of apartment living. My apartment is in a nice area in an excellent town that’s about halfway between each of our places of employment so the convenience is there as well. It’s expensive but brand new and efficient and safe and I was expecting to stay there for at least another year. My lease is up in September and the plan so far was to renew.

We’re super picky and both assumed it’d take us forever to find a house when we seriously start looking and do note that we weren’t even looking at this point.

The little blue house with the open house sign was just something to do to kill time on a Sunday afternoon. We’re both big fans of the HGTV home shows(even if they’re staged) and enjoy looking at open houses from time to time to get an idea of what’s out there on the market for when we actually start looking and that’s why we stopped and decided to take a gander.

We pulled over, I checked Zillow to see if the open house was still in progress as it was later in the afternoon and there were no cars in front and saw that we still had about 10 minutes left before it was all done.

The area is cute, one we drive by quite a bit although it’s in a town I hadn’t really considered too seriously as a potential area for purchase due to the high taxes and generally high prices. Still, it was worth looking and this house fit our budget even if the taxes were a bit higher in this town than the surrounding areas. Plus, we weren’t seriously considering being home owners at the time anyway so what did it matter?

We walked into the house, met the nice listing agent and pretty much fell in love with the place.

Continue reading “Life!”

My 2017 Annual Goals

I’m a bit late to the party here but it’s time to lay out my 2017 goals. I didn’t have any goals last year but I’ve been listening to a book recently that spoke to the value of writing down goals when it came to actually achieving them.

I think it’d be fun to set not only financial goals but also some personal goals. I also thought it’d be enjoyable to tier my goals into three levels. I’m going with bronze, silver and gold to reward myself at the end of the year! I’ll make bronze a reasonable level that I think I can reach with my regular approach and then stretch it out with the silver and gold tiers. It’ll be like the Olympics when I review this in 2018 and award myself a variety of medals based on how well I did in 2017!

I’m aiming to at least have as many bronzes as there are goals but am hoping for some silvers and golds in 2017 as well! Continue reading “My 2017 Annual Goals”

My portfolio – April update

The market has been essentially flat since my last update with a 1.2% increase in the S&P in that time frame.

I haven’t been too active since then as other things in my life have kept me busy but I did make an important move in the last month. That was moving some of my extra cash into my Roth IRA and maxing out that out for 2015. All that cash went into my REIT fund which was underweight in my asset allocation. If you’re reading this right now and still haven’t maxed out your 2015 Roth IRA then you still have a week to do so as 4/18 is the last day to do that for 2015. It’s also the last day to submit your taxes if you haven’t done that either.

The Roth is one of the best savings options as it offers tax-free growth and tax-free distributions. It’s also potentially the only other option for tax-free growth beyond a 401k especially if your income is above a certain level as the traditional IRA phase out happens a lot earlier in that scenario.

I had a big influx into my account last month with a raise and a bonus and a big contribution to my 401k but my savings rate this month dropped quite a bit. I reduced my 401k contribution to a lowly 14% as I want to make sure I keep getting my employer contribution and to do that I have to make contributions through the end of the year and I’d be in danger of maxing out my 401k and missing out on those if I went a lot higher. That means I get a bigger paycheck but it also lowers my automatic savings rate. I can and will certainly use that extra money to fund my taxable accounts but it’s always easier to just have that done automatically.

I’ll start tracking my savings rate this month just to see exactly how I’m doing there and where my expenses are going. I feel like March wasn’t a great month on that regard as I spent a bit more than average there after a huge savings month in February.

There were no individual purchases made this month – all the money went into funds and ETFs. Just like last month, I’m not seeing a ton of value out there. I’ve started working on a DCF analysis spreadsheet that I’ve been meaning to work on and have done a quick analysis on a few stocks on my watch list and nothing has piqued my interest.

Last month’s total stood at $305809.68, an 11% increase over the previous month and while this month shows growth as well; it’s far from that growth due to a slower market and much lower contributions.

I saw a 2.3% improvement in portfolio size this month. It’s always good to see growth although month to month growth isn’t something I’m concerned with as a long term saver. After all, if the market drops then I’m buying things at a lower price with my extra cash and dividend proceeds which is always going to be better for long term returns.

The total after this month stands at $312939 which is nice considering my savings rate this month probably wasn’t that high but we’ll see what it was when I do the number crunching next week.

My cash hoard went down from 9.5% to 8.1% as I moved some of that money into my REITs via my Roth IRA.

Now let’s take a look at how the asset allocation looks and where I have to make adjustments.

Still a bit off here with mid-cap, bonds and international being a bit high and the US caps being too low. It’s really hard to get a high % asset like the large cap back to snuff since 3% of my portfolio size is nearly $10000 at this point so it’ll take some time to fix that. However, I’m certainly getting closer to where I want to be compared to where I started. REITs and small-caps which were way off before are getting much closer to where I want them to be now.

Here’s where I am against where I want to be based on my asset allocation targets.

  • US Large Cap at 39.1% versus 42.5%(-3.4%)
  • US Mid Cap at 11.8% versus 10%(+1.8%)
  • US Small Cap at 8.8% versus 10%(-1.2%)
  • US REIT at 8.7% versus 10%(-1.3%)
  • International Developed at 16.4% versus 15%(+1.4%)
  • International Emerging at 5.8% versus 5%(+0.8%)
  • US Bonds at 9.4% versus 7.5%(+1.9%)
Last month I had four asset classes that were more than 2% away from their target allocation and now I’m down to just one! I started with small-cap being 5.6% underweight and we’re just 1.2% below target now.
Last month I moved some mid-cap money to small-caps and moved some bonds into REITs and this month I had some heavy contributions to REITs and all those served to remedy some issues with my asset allocation. I’m certainly still not where I want to be but I’m getting there!
I think I’m too far behind on my large caps now so I need to adjust for that. Here’s the changes I’ll make to account for that.
  • 401k contributions will be changed to about 65/35 large cap/small cap.
  • Use excess cash to look for attractively valued large cap and small cap securities.
  • Potentially move some US Bond money in my Roth IRA into a large cap fund of some sort.
The plan has always been to let my contributions fix the asset allocation and that’s mainly what I’ve done so far. I have made some moves to reduce my bond and mid cap allocation by exchanging those into classes where I was underweight and I may do the same this month to boost my large cap exposure. However, I might hold back on that since most of my individual security purchases in the future will likely be large caps so I don’t mind having that asset allocation be a bit underweight since it can swing wildly with one purchase if a good value emerges.
In a week or so, I’ll post my savings rate/budget post for March. I don’t think I did too great there. I made a conscious decision to not make any changes to my spending patterns for the next few months to make sure I’m capturing a realistic budget/savings rate in the upcoming months. I want to see what my spending patterns actually are before I make any changes at all and in order to do that, I want to get a few months of regular spending in there to get a clear pattern and an accurate regular savings rate.
See you all in a bit. Hopefully the cold will finally leave us by then!

Taking a long term view on investing with market volatility

This type of market is not for the faint of heart especially those that happen to look at their portfolios on a day to day basis. The volatility seen in the first few days of the new year has certainly spooked a lot of investors and I’ve seen posts of fear on investing message boards I frequent.

There is a large portion of the population that will not act rationally when these types of market events happen. I’ve seen people who bought Apple or Disney in the recent run up in the 120s and are now seeing their investments evaporate before their eyes in a very short period of time as the stock prices sink into the 90s. The first thing to remember is that individual stocks bring with them additional risk and volatility when compared against the market as a whole and an bigger emotional aspect to the trade as well.

When I invest in the market as a whole where it be a large-cap fund or a small-cap fund, I’m investing in a basket of hundreds or even thousands of stocks that are essentially a stranger to me. I know that the stock market goes up in the long term and I’m generally dollar cost averaging through my paycheck via 401k contributions or HSA contributions or IRA contributions or even taxable accounts. I know that I will be putting money into these accounts for years to come so the purchase price isn’t all that relevant to me. If I buy shares in the S&P 500 today and it goes down tomorrow and then again the day after, I don’t mind as much because I know that I’ll buy more in two weeks or in a months’ time. A lower price is actually beneficial to me because since I’m buying for the long term – the short term price fluctuations don’t matter. Sure it still stings to go into my 401k and see my net worth decrease by 10% if the stock market takes a huge swing. However, if I truly believe that the stock market goes up in the long term and I don’t plan to retire and don’t need the money for 10+ years then I can see this as an opportunity to buy more at lower prices.

However, I think things are a bit different when I invest in individual securities. I think the anonymity that comes with index investing disappears when I look at one individual stock. That’s part of the reason people tend to over-react during these types of events when it comes to individual stocks. When I buy a stock, I tend to do a ton of research on it; whether it be looking into what the company does or pouring through their financial statements. Not everyone does the same amount of due diligence but I think even more relaxed investors see investing in an individual stock as a personal decision more so than investing in a faceless index fund. Individual stocks have faces – they have CEOs, they have products you use and love, they have financial statements that you looked at and deemed as good and they have valuations that you looked at and deemed as a fair value.

Individual stocks also tend to have anchors more so than index funds/etfs and people tend to use those anchors more often when it comes to individual stocks as a statement of value. These anchors may be things such as products, personal opinions – whether their own or others and even historical prices. All things that may have an impact on the price of the security but may be seriously overvalued by the individual investor when determining an effective price.

It’s often very hard to tell what has value and what doesn’t when it comes to stock valuation unless you have a thorough understanding of the company as a whole. A lot of people out there don’t do the analysis necessary to get there before making a decision to buy the company.

Let’s look at a company like Disney which had an amazing run up in recent months all the way up to the low 120s, a price that had an investor paying nearly $24.5 for every $1 in earnings the company made in the last year. That’s a pretty steep price for a mature company but certainly deserved if the earnings growth was expected to be high and with Star Wars coming up, how could it not be? The problem with Star Wars from an investment thesis is its capacity to deliver on expectations as a product anchor. I think Star Wars’ expected success made a lot of people invest in the company.

The movie came out, crushed box office records and the stock began to fall? I was personally invested in Disney myself but sold my position right after the release of the movie as the record breaking pop wasn’t there and I found the stock price too rich for my blood. Yes, Star Wars is a box office giant and will generate a ton of cash through future films and licensing but a quick look at the company’s financial statements would show you that Star Wars will only impact around 25% of their revenue and even less of their operating margin. Disney’s main drivers are their networks including ESPN and ABC and parks and while parks continue to thrive, the cable landscape is rapidly changing with ESPN recently losing ~7M subscribers and dropping by ~10% in ratings last year. While Star Wars and Marvel and Pixar will continue to be great performers for Disney, 50% of their revenue is tied up in something that has a questionable future and will likely be an earnings drag in the near future. Paying a P/E of 20+ for a mature company that has those types of issues just didn’t make sense to me so I sold out. I still like the company and will likely buy back in if the price drops to a value I deem fair but until then – I’ll look towards other stocks.

The problem is that some investors don’t do that type of analysis when it comes to their stock purchase. They may anchor themselves to one item they like such as Star Wars that may be a great product but have a small effect on overall earnings. They’ll end up buying something for the wrong reasons. When they see the stock drop following the more than successful release of the movie, they panic and sell out.

On top of that buying an individual stock is a decision you make yourself. As with all decisions, people tend to be overly emotional and driven by a need to be correct lest they be proven wrong or stupid to others or themselves. There is a level of shame that comes along with a bad investment as well that may cause people to make bad decisions. An investor may buy things for the right reasons but panic and sell when it drops 5% because they don’t want to seem like a bad investor. These emotional anchors also tend to weigh down gains because long term that stock may rise again. Since the investors considers the company a solid investment, they might buy back in at a higher price instead of just staying with the holding through the ups and downs.

Apple is a good example of this type of stock which moves up and down based on rumors often all while maintaining a solid valuation. Recent moves have been driven by rumors about supply chain cuts which may or may not be revealing of future earnings but have cause the stock to drop below 100. I’ve seen many people talking about buying the stock at 130 and now selling because of these new rumors – an emotional decision that might be driven by more than just valuation changes because nothing much has changes as far as analyst projections and expected sales. Apple is still a deal at a P/E of 10-11 when you look at its growth, cash hoard and product pipeline. Phone growth might certainly slow but the company is priced attractively now and I may purchase more if the stock market dip continues past today.

Price is another area where people anchor themselves too often. Buying Apple at $130 and seeing it at $100 doesn’t mean it was a terrible investment as the stock may be priced at $200 in a few years. The thing to ask yourself when these types of movements happen is whether or not your original investment thesis has changed since you bought the security. When I bought Disney, as an example, I wasn’t overly concerned by ESPN and was happy with the recent LucasFilm acquisition. I sold it later as new information about ESPN ratings and subscriber count came to light and the price rose above a fair value which changes my original investment thesis.

In my mind, Apple is still a strong company and I would be happy to buy in at $100. There are certainly risks with slowing growth but I think they are one of the better values out there right now in a market that is short on companies that seem like a good deal these days. There are plenty of companies out there that are great(JNJ, PEP, PG, etc are just some examples) but their price is simply too rich for my blood at this point and I’m a patient investor so I can wait on the sidelines a bit until their price reflects their value in my eyes.

Price can be an issue in the opposite direction as well.  Stocks of the many commodity companies that have dropped more than 50% in the past year. Companies that used to be priced in the $80 just a few years ago are now priced in the $20s as commodity prices sink. Investors will tend to anchor themselves to these old prices as something that the company can achieve again and fail to recognize the issues facing these companies regarding debt load and continued low commodity prices and try to catch falling knifes.

That’s not to say that emotions are always a bad thing or that it’s impossible to find attractive valuations on companies that have fallen too much or risen too much. It’s just that individual investing brings with it additional risks and emotional attachments that more people need to be aware of especially in times like these when the stock market sees repeated 2-3% swings in the wrong direction. There are certainly pitfalls in moves like this. You can sell fairly or even well valued companies in fear or you can buy overvalued companies that may fall more because you feel the stock market is on sale. All I’m saying is that investors that invest in individual stocks need to do more due diligence than those who invest in index funds or ETFs because the risk profile, analysis required and emotional connection is different.

Individual investing also means that the initial buy in price is important as well as you can easily over pay for an individual security. The company may be excellent and the financial statements may be amazing but I certainly don’t want to pay $30 for every $1 in earnings the company makes unless I expect the growth rate to be tremendous. There are mature companies in this market priced at P/E ratios of 25-30. These mature companies don’t have growth rates to support those kind of multiples so despite them being amazing companies with a good long term track record – I’d rather not invest in them now because the value isn’t there.

I constantly revisit my individual stocks. I recently sold Disney as mentioned because I felt the value was too high and recently sold off more shares of UNH for the same reason. I still think the stock market as a whole is priced a bit too high and has room to fall so I’m keeping some extra cash on the side in my individual trading account as I search for good values.

However, this is not the case in my index funds/ETFs.

When I look at an index fund or the S&P 500 in general. The only things I can really anchor to are earnings and market conditions. The S&P 500 doesn’t make a product, the S&P 500 doesn’t have talking heads talking about whether the CEO of the S&P is doing right or wrong. It’s easier for me to buy something like the S&P 500 because I don’t really have to look at financial statements, nor look at the product pipeline, nor see what everyone is saying about the S&P 500. There are of course still market conditions that I can look at but in general, the amount of noise about the S&P is a lot less smaller than the noise about any individual stock especially some of the more popular ones like Disney or Apple. As such, the volatility in these types of securities will be lower as will the level of analysis. In fact when I look at my these broad market securities, I don’t have an internal struggle about whether what I’m paying is a fair value because I truly believe that in the long run – the market itself will go up and todays price is likely to be lower than a future price. That just isn’t the case with individual securities as they have a much broader risk profile in my mind.

P/Es of individual companies are a bit too high for my liking so I’m not running to put my money into individual securities just yet. There is a very real fear out there of missing the next big thing and not buying when the stock is priced low.  But if stock market history has told me anything is that when it comes to individual securities, value will eventually show itself and a decent entry point will eventually arise. Apple is a great example of this as the stock was $60 in January of 2012, rose to 90 by April of that same year, fell to 75 by May, rose to 100 by September, fell to 55 by April of 2013, was back up to 75 by November and then rose to 100 by October 2014. This is the biggest company in the world with the most analyst coverage out there and it has such big swings.

Long term – the trend with any individual security will follow its fundamentals but short term fluctuations will exist due to emotional market sentiment so the fear of missing an entry point shouldn’t deter you from keeping money on the sidelines in a volatile market like todays. If you miss out on Apple, there will be plenty more out in the long run. I’m not advocating keeping money out of the market for the long term here but there are times – like now – where I think values of certain individual securities get stretched and I’d rather wait for them to get back to a more reasonable price. Yes, there’s certainly potential of missing an up trend which is why I’m never taking 100% of my money out of the stock market but I do think there’s value to waiting for value to present itself when the P/Es of individual stocks get a bit too far out of the realm of affordability.

Do note that I always keep 90% of my investment funds in either stocks or bonds as per my laid out asset allocation/strategy so this is not a deviation from my belief system that time in the market is the best idea. However, I do want to have some flexibility around my individual trading account when I feel like I can’t find any stocks that are priced attractively. I think it’s important for a long term investor to not lose track of their long term goals and minimizing the amount I can have out of the market is one way I do that.

Despite this propensity for me to keep some money on the sideline when it comes to my individual trading account; I have no real issues pumping in more money into my 401k, Roth IRA or individual account ETFs no matter the valuation. I think the long term stock market trend is up and there’s a lot more potential of catching this uptrend when I’m investing in the market as a whole than when I am in individual securities. I’m willing to do this for broad market securities(index funds or ETFs) because their risk profile is much lower than an individual security. It’s a lot less likely for me to buy the S&P 500 at 2000 and for it to remain below 2000 forever than it is for me to buy Company A at 100 and for it to remain below 100 forever. Neither is impossible of course but I’m a lot more comfortable with the S&P 500 at a P/E of 20 than any other individual stock company at a P/E of 20.

What I’m saying here is that an investor should ask for a much better value from his/her individual securities than from their index funds and ETFs because they take on much more risk and are more likely to make emotional moves and poor decisions when it comes to their friend; the individual stock. If I’m not finding an individual stock that I think is attractively priced at any given moment – the right response is to either keep some money on the side until that stock arises or put that money into an index funds or broad ETF that offers long term capital appreciation at a much lower risk than an individual stock.

There will be times where values emerge and that’s when I’ll be more eager to put more money into individual securities. In my mind – that time isn’t now but I’m no seer so I’ll continue to put money into the market as a whole despite the market turmoil simply because I know it’ll eventually start rising again. In the meantime, I’ll keep an eye out for good values and let you know when I find some. For us long term investors – these short term drops are a good thing despite the drops to your accounts. Buying at a lower price never hurt anyone.