Today is the Fiscal end of the year for my family… at least for now (I’m going to move it to Jan 1 this year). It was ten years ago that I started investing (so sad that it took so long for me to do this!). Ten years ago, my wife and I were getting to the point where we were so financially stable, that we didn’t really have to track our finances at all. This was not always the case; for years we struggled: college (twice!), two kids, our first & second home purchases (sequential home purchases; we did not buy two homes), and some major travel expenses (my love of world travel) always seemed to keep us at net zero. Once I finished my Master’s, and no longer had that expense to deal with, we found ourselves actually making money. That’s when I decided it was time to get into the stock market.
I had studied the stock market for about 10 years up that point, and on paper, I was making money… a lot of money (again, on paper), so why not try it for real? I also chose 1 October as our family fiscal year because I usually concluded my travels by September, and began saving for Christmas in October. 1 Oct and 1Feb were also the low points of my annual bank cycle so why not make one of them a fiscal year. I chose 1 October. (I’m now moving to 1 Jan starting this year because, although a fiscal year is a good idea, it really messes me up with tax-time preparations; if I were on quarterly taxes, I could keep 1 October, but I expect to be on a regular paycheck sometime next year, Lord willing). Anyway, I made my first investment on 1 June, 2001, committed myself to putting 5% into the stock market every year, and I also maxed-out my 401K at 15%. Since I also gave a tithe to my church, my wife and I were now living on 70% of our gross income. It was painful, but manageable.
10 years later, our mix of stock and 401K percentages has changed (I got capped on 401K – a good problem! – and my wife’s 403b plan sucked so we killed it), but we still put away 20% for long-term investments. Now that I have no (paying) job, we’re contributing 0% in 2011, but I’m sure that will change. Actually, contributing zero in a down year is not a bad thing. I might start funding again at the bottom of the market!
So, how have we done for ten years? Well, not too bad. I can’t say that I’m a stellar stock picker, but I am beating the cost of living index (inflation) and the S & P 500. I’m not losing money; in fact I’m averaging 7% per year currently. Take away 2002, 2008 & 2011 (all horrific years) and my percentage goes way up. God is good!