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Old 06-24-2014, 08:11 PM   #21
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Originally Posted by traineeinvestor View Post
I have a budget for "luxuries" - $X per month - and if I want something, I have to "save" for it from this budget. In theory it doesn't matter how well or how badly the investments are doing but in practice it does - when the markets are down, I tend not to spend it.

Our "luxury" monthly budget is a percentage of NW. (Now at 0.5% of NW / year).
This worked for us.


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Old 06-24-2014, 09:13 PM   #22
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My solution to the problem is this; don't put them on quicken, or mint or anywhere else. Only open every third statement you receive. Or maybe only open the statements once a year. Honestly, I do the every three month open the statement plan, and I am pretty sure it saves me from all kinds of nutty behavior.
+1
I just look once a quarter to update the spreadsheet that I have been keeping for the past 20 years. When I see quarterly gains it doesn't tempt me to spend for some reason. I guess it feels like a long term gain and so doesn't impact my short term spending urges.
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Old 06-24-2014, 09:22 PM   #23
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I sometimes fall for this in my trading account (up 49% this year alone but that is another story).

I will sell a stock on Monday that I bought on the previous Thursday for a $1000 profit, then rebuy the same amount of shares on Tuesday for cheaper than I bought originally. I then start thinking of the $1000 as free money and stop for a latte instead of going home and brewing a pot of coffee. Bad behavior.
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Old 06-24-2014, 09:43 PM   #24
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I will sell a stock on Monday that I bought on the previous Thursday for a $1000 profit, then rebuy the same amount of shares on Tuesday for cheaper than I bought originally. I then start thinking of the $1000 as free money and stop for a latte instead of going home and brewing a pot of coffee. Bad behavior.
I do not even have that problem.

Most of my holdings are long-term, but I would make a short-term trade of $10K-50K in some volatile stocks as a wager against short-term market movements. And even when I make a $2K-3K profit in a matter of 2 or 3 days, that gain may be lost amidst the long-term holdings' movement in the opposite direction when I look at the Quicken reporting bottom line.

I often do the above to hedge for my long-term holdings, and while it is not much of a hedge, I can still console myself that instead of "losing" $100K in that market drop, I only lost $98K by playing that volatile stock and recouping $2K.
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Old 06-24-2014, 09:56 PM   #25
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Now that I am retired, I know that I would tighten the belt if the market crashed. That would happen simply by reflex, I am sure.

The other side of the coin is to relax more about spending when the market is thriving, and sometimes this is harder to do. I have spent some time lately contemplating what I could spend a little extra money on without wasting it.

I love my new keypad entry side door, with enclosed blinds. This was a good use of money because it is practical and also makes me happy.

It is conceivable that I could go a little overboard if the perfect house became available here, and if I bought it before selling my present home. However, the chances of that happening are slim.
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Old 06-25-2014, 02:28 AM   #26
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+1
I just look once a quarter to update the spreadsheet that I have been keeping for the past 20 years. When I see quarterly gains it doesn't tempt me to spend for some reason. I guess it feels like a long term gain and so doesn't impact my short term spending urges.
I would suggest that it is imprudent to only check your investments once every 90 days. What if someone improperly gained access to your account and stole your money? What if the entity holding the money in error, debited money from your account, or sent your money to someone else?

Yes, yes, yes. I understand that those things are uncommon, but they do happen.

For example, there is the recent thread regarding someone's friend not checking his bank statements for months and $35k vanishing from his account and much of it the bank need not replace because he didn't notify the bank within 60 days.

Personally, I check my investment accounts on a near daily basis. I don't dwell on how much it has gone up or gone down, but I do make sure it is all there and that there have been no unauthorized transactions.
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Old 06-25-2014, 02:35 AM   #27
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Good point! I wonder if the brokerage is liable only for losses within 60 days, the same limit as for banks.

Some people advocate looking at investment accounts or 401k as infrequently as once every 6 months or a year, only to rebalance. What if you have nothing left to rebalance?
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Old 06-25-2014, 02:40 AM   #28
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I thought about that in the 2000 crash - I said 'heck, a nice car does not depreciate as fast as my stocks just did!'

-ERD50
Back then, both my wife and I were not thinking about ER. I remember distinctly her lamenting to me that with the money lost, we could have upgraded to a nicer home. And as it further developed, the money lost from 2000 to 2002 could have bought us 2 more homes like the one we had, and still live in today. Maybe it was 3 more homes, as the housing bubble did not develop until after 2002.
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Old 06-25-2014, 06:52 AM   #29
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I watch the sum of my retirement accounts go up and down and keep telling myself I shouldn't do it. But when there's a good "up" day I tend to think how my RE date just got a bit closer rather than feeling I can blow a few thousand dollars.
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Old 06-25-2014, 08:05 AM   #30
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I keep a spreadsheet that tracks net worth and save the values as of the first of every month. If the market is going up, I tend to update it more often, but only the past monthly values are saved.

I have to admit that the good market of the last few years WAS a factor in my deciding to retire rather than seek a new job when I left my last one, and I'm encouraged that our YTD net gain is about 3 X what I think we'll need to pull out by year end. Having seen large chunks of it disappear on the financial crisis, though, I'm still cautious.
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Old 06-25-2014, 08:15 AM   #31
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Good point! I wonder if the brokerage is liable only for losses within 60 days, the same limit as for banks.

Some people advocate looking at investment accounts or 401k as infrequently as once every 6 months or a year, only to rebalance. What if you have nothing left to rebalance?
But how exactly do you prove it was not you who logged into your account and bought 10000 call options for Twitter at a $90 strike?

A hacker could do a lot of damage that might be hard to reverse.
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Old 06-25-2014, 08:24 AM   #32
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I do not know if brokerages log IP address associated with each transaction or not. Or even if they do, is it still your fault for not protecting your account? So you do raise a good concern there.

Still, if you discover that 10000 option purchase right away, you can sell quickly and only lose the spread. Or maybe you see that it's now in the money, and decide to ride it out and thank the hacker for allowing you to ER?

Anyway, this has happened in the past. A hacker broke into an investor account and used it to buy some penny stocks, which he was probably selling on his end. The police was alerted and caught him. This was more than 10 years ago.
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Old 06-25-2014, 08:32 AM   #33
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I get an email with every order placed. If they turn that off, I get an email. If they change the email address, I get an email plus snail mail.
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Old 06-25-2014, 08:32 AM   #34
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Like some others, I only update my NW totals monthly.

But, since my goal for that net worth is FIRE, a larger number makes me feel happy that we may hit our number earlier than currently projected; but, this doesn't make me want to spend more - it's almost the opposite. If we did that good during that period, imagine what we could have done if we saved EVEN MORE!
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Old 06-25-2014, 08:42 AM   #35
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Check the markets and investments daily, but changed from monthly to quarterly for the record books to reduce noise. Thankfully, the quarterly NW has been increasing steadily since retirement more than four years ago. I know there will be a downturn periodically, but hopefully not like 08. Will have to take SS and RMDs in a couple of years and need to get some more of my former employers stock sold before then and get into higher yield.
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Old 06-25-2014, 08:58 AM   #36
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I check my investments daily as well, but, like others, only record one day of the month...the last day. A few years back, I used record the extremes. For instance, if June 24th was the best day of the month, and happened to hit a new high, I would use that day's data for the month, rather than the last day of the month. But, if it happened to be a bad month, I'd pick the worst day of the month and save its data in my spreadsheet. The one exception was December, where I'd use the value on the last trading day of the month.

But, in 2011, September I think, I decided to just start using the last day of the month. It's simpler that way, and tends to smooth out the peaks and valleys a bit.
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Old 06-25-2014, 08:59 AM   #37
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I think I have the opposite problem as I keep thinking wouldn't it be great if I just had x% more. Already "upgraded" several times.
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Old 06-25-2014, 09:31 AM   #38
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I do look every couple of days but am not tempted to make a decision based on a single day's gain or loss. Most of the "toys" I desire I could get regardless of those daily fluctuations - the bigger issue is more "do I*really* need it" and "will I have the time to spend with it".

For trends I prefer looking at the month end values. I always look at my totals and ask the question "If I lost 15% of this, could I still sleep at night?" I'm fortunate that I can answer yes to that question these days.
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Old 06-25-2014, 09:33 AM   #39
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When we first retired, I checked daily and updated monthly. Now after 12 years, I update half-yearly and report the 6 month results to DW. I check my stock portfolio more often, maybe weekly. I get email notifications for all orders.

So I don't spend based on results. But when the portfolio is buoyant, I will relax a little when DW wants something new.
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Old 06-25-2014, 09:42 AM   #40
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I would suggest that it is imprudent to only check your investments once every 90 days. What if someone improperly gained access to your account and stole your money? What if the entity holding the money in error, debited money from your account, or sent your money to someone else?

Yes, yes, yes. I understand that those things are uncommon, but they do happen.
Good point. Maybe I should check monthly, but only record the results quarterly. Even monthly I doubt I'd be tempted to change spending habits much, whether the balances are up or down.
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