Who kept investing heavily through the great recession?

[SecondCor521]

Seems like it!

I think OP might have better titled this " Who did not keep investing/rebalancing through the great recession?"

From the way it was worded, I'm guessing he expected a smaller number of positive responses?

Although there were quite a few posts of people who seemed frightened by this little bit of volatility in the market recently, so maybe more 'chickened out' than it appears?

-ERD50

I think there were some here who did sell at the bottom and maybe waited too long to get back in, if ever. I would imagine those people are not posting on this thread. Thus this thread is not a scientifically valid random sample of the population. (Obviously.)

 

[Huston55]

Yup.

 

[old woman]

I was 60 with a decent job and 400K invested in the markets. I couldn't make myself look everyday but kept maxing my ROTH and 401K. I worked harder and got more raises and bonuses so with putting in more and more recovered pretty quickly. I went from thinking 400K was enough to retire to deciding it wasn't. I retired in 2014 with about a million.

Now I am teaching my niece and nephew to invest. I gave them each about 25K to invest. I told them which ETF to buy but told them the goal for the money was to learn from the school of hard knocks and to learn to feel their guts. The brother bought AMZN and sold it high, his sister them bought AMZN at the high so he can tease her. She bought one company that fell and asked me when to sell and I told her when it gets to zero, she sold it anyhow. They have about 20 years to retirement so need to learn. I am 70 now and getting RMD so might be gifting them more most years so they can learn more. They also save money in 401K but I wanted them to have ROTH and taxable. I plan to leave an estate to them so want them to know how to invest. This current down turn is teaching them how losing feels.

 

[atmsmshr]

I was quite sanguine about the 2008-2010 period because I had a job and was buying stocks on sale. However, there was one point, I think it was in the fall of 2009, when Lehman was going bankrupt and the market was dropping hundreds of points in a day and the government was intervening, that I thought to myself, "Well, maybe this time it is different and this is the end of the world."

I didn't think it was, but it seemed like a possibility to be considered. I then threw my hands up and said to myself, "Well, if it is the end of the world I can't do much about it, and at least I'm a bit better off than some because I have my health and an education, so I'll make do with whatever happens."

Similar thoughts except I was the opposite end of sanguine. My view was world wide capitalism was on the brink of disaster and it was a real possibility of standing in or serving in the soup lines.

 

[Golden sunsets]

DH retired on July 3rd 2008, so his contributions to his 401K stopped then. He did max out by front loading the 401K for the first 6 months of 2008 and those funds were invested in stocks. We then watched the carnage throughout the fall of 2008, with white knuckles. I was self employed and paid out my max solo 401K contribution from my Sub-S in December. The max that year was around $46,000, I think. Rather than invest it though I sat on it until March 9, 2009, when I finally gathered enough courage to plunk it down on the S&P. Dumb luck that the day I finally bit the bullet turned out to be the day the markets turned. I do recall that for about a year from late 2007 through 3/2009, that we only kept track of broad totals and didn't investigate the details of our holdings....sort of what we have been doing lately. We do plan to rebalance in January, regardless of where the markets are.


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[jarts98]

Kept buying and rebalancing on schedule through the downturn. Turned out fine for us and will again (if this volatility turns into something significant).

 

[rasberrycpa]

I was working at that time and we were saving about 35-40% of our income between 401ks, a non-qualified deferred comp program and other taxable equity investing. I am pretty risk tolerant, so we just stayed the course in our dollar cost averaging. We also diversified our portfolio a little further by purchasing two rental properties when the real estate market was still on sale in our area.

However, I will admit that I stopped looking at portfolio balances online and quarterly statements. Intellectually I knew we were doing the right thing but I couldn’t bring myself to look at the balances.

I retired this year and sequence of returns risk has been niggling at the back of my mind. However, the 08-09 drop taught me:

1. Once the paychecks fully stop (my husband is still working) we will keep a couple of years spending in money market/cash balances. We will most likely just roll this on top of our existing emergency fund into a single pool of money.
2. We will be prepared to get some part time work for a temporary period if we are worried that the cash bucket is draining and we don’t want to sell investments at current market levels. I wouldn’t consider it failure to have to take on part time work...it would just be the prudent, responsible thing to do.
3. While not wealthy by many definitions I have seen on this board or by Suse Ormon’s measure, we are doing better than probably 95% of people our age so we will be able to weather the future relatively well.

Looking back now, I wouldn’t change a thing we did in 08-09. Buying while equity and real estate markets were on sale likely helped us to accelerate our retirement by a couple of years. I am hoping when the next major downturn comes after both paychecks stop for us we will be as calm and mindful in our approach. I know I will be reading on this board for daily reassurance.

RAS

 

[pb4uski]

You made me curious. My contributions for the 2008 were 3.8% of my beginning of year balance and in $$$ a bit more than 2007 or 2009. My total return for the year 2008 was ~-28%.

 

[Callitaday2022]

In 2008 got a call from salesperson from wifes USPA/First Command saying if we did not buy 500k to 1 million in whole life they would drop her to telephonic access only.
Went to local T. Rowe office and had them transfer everything out. She had been investing for 13 years in their funds and she had actually lost money! Got tax harvest loss and put a lot in T. Rowe and depressed prices.
I am glad she did save/invest rather than spend the money, but what a bad company. They stress the importance of systematic investing and compounding, but take 50%! of first year investments as fee and had huge front end loads!
Got call from manager and was then told that requiring whole life purchase was not their requirement, but a I just said good riddance to your entire horrible company.

 

[Beer-man]

Thank you to all for the great responses! I will revisit this thread often for reassurance instead of my statements and vanguard account.
We had automated our 401k’s back then but I significantly reduced my % going in and accelerated low interest debt payoff instead as i got a pay cut and faced a looming job layoff for 4yrs. My wife kept hers going thank goodness and we got aggressive in the savings department back in 2014.
Coming into prime earning years so a downturn would conceivable be a favorable thing to but into

 

[Moemg]

I retired Jan.2008 and proceeded to lose over 30% of my portfolio . I was scared silly but talked into staying the course by some of our saner members and I am glad I did . I got back all my losses. It took a few years but I was made whole . I kept taking 4% of my year end balance and despite that my portfolio grew . Several of my friends got out when they started losing and never went back in . Last Friday when I was complaining about the market they were saying how smart they were to get out . I said nothing .It was a really scary time but in the end it is only money not your health which is worse to lose.

 

[Lawrencewendall]

I guess I was oblivious to the crash as I was in the process of rolling over IRA's from one broker to another. According to my records, from 1/1/08 to 12/31/10, I made 250k in purchases so I guess I wasn't that spooked.

 

[steelyman]

One thing I remember clearly about the ‘08-‘09 period was how fast and deep everything fell for months.

It was natural to be frozen like a “deer in the headlights”, as previously mentioned. One could easily feel helpless at times like that.

Having investments “once removed” from an itchy trigger finger (like in an employer retirement plan or IRA) helps.

 

[TwoByFour]

We had a FA managing a big chunk of money I came into as I was way too busy with my career to think about how to invest it. Sometime around late 2008 I noticed how far things had fallen and told the FA to sell about 30% of the portfolio, which he did. We got back into the market in spring of 2009. So, 70% of the taxable part of our portfolio rode the crash out, but 30% missed the bottom and the recovery.

Two years later I looked back on the events of 2009 and wondered what good a FA is - he did not keep me from shooting myself in the foot. So I took control of our investments at that time and got rid of the FA.

In the long run, my panic in 2008/9 did little damage. I left the 401k 100% invested and only panic-sold 1/3 of the taxable but quickly got back in. I estimate that the long term hit to our total portfolio was less than 10%. It was a good lesson for us - we learned that an FA cannot save you from yourself and we learned that yes, markets do recover.

 

[Lawrencewendall]

We had a FA managing a big chunk of money I came into as I was way too busy with my career to think about how to invest it. Sometime around late 2008 I noticed how far things had fallen and told the FA to sell about 30% of the portfolio, which he did. We got back into the market in spring of 2009. So, 70% of the taxable part of our portfolio rode the crash out, but 30% missed the bottom and the recovery.

Two years later I looked back on the events of 2009 and wondered what good a FA is - he did not keep me from shooting myself in the foot. So I took control of our investments at that time and got rid of the FA.

In the long run, my panic in 2008/9 did little damage. I left the 401k 100% invested and only panic-sold 1/3 of the taxable but quickly got back in. I estimate that the long term hit to our total portfolio was less than 10%. It was a good lesson for us - we learned that an FA cannot save you from yourself and we learned that yes, markets do recover.

+1

If I fail or falter, I want it to be my own fault and NOT someone else's.

 

[RenoJay]

During the downturn in ‘08 and ‘09, not only did my stock investments tank. My business (ie income) evaporated and my house dropped >50% in value. I took nearly everything I had and went all-in to stocks. At the bottom of the market in March ‘09, I had about 90% of total net worth in stocks, but also had huge anxiety about it. It was the right call and now net worth is many times higher than then. However, now I believe markets are way overvalued and I’ve cut down to about 15% of my net worth in stocks over the past two months.

 

[pjigar]

I stayed the course... technically I was a buyer since I was still making 401k contributons and those were being invested in stocks.

OTOH, my AA was screaming at me to sell bonds and buy stocks since the market drop twisted my AA compared to my target AA but I could not summon the courage to do that... I was a bit like a deer in the headlights when it came to making a big move.

I sold *all* (30%) my bonds and bought stocks somewhere during the bottom of the market. DCA via 401K contributions never stopped throughout.

 

[VanWinkle]

I was at 65 equities at that time, and kept investing every 2 weeks just like before. I would like to say it was courage, but I really never looked at the account during the entire downturn. I did have it set on auto re-balance, so I guess you could say I bought more equities on the downturn.

 

[CyclingInvestor]

I had just retired in 2006, so was not investing new money, but stayed at 100% stocks thru the correction, as I have been for 25 years now. Since I was living on the dividends, and they all kept going up, there was no stress.

 

[6miths]

I did but mainly because it corresponded with my peak earning years and seemed like USD and US equities was a good place for a large part of the money. Both worked out and greatly aided in FIRE.

 

[MikeD]

We had sold near the high point prior to 2008 by guessing and luck. I kind of thought this rise can't go on forever and got out of 100% stock and into 100% cash. Then when it crashed I watched with (sort of) glee and waited until I thought it couldn't go lower. My wife and I talk a lot about it and we finally decided to go on vacation and not think about it. On one of the vacation days we decided to get back in at the next down day so we didn't have to worry anymore and just do it and get it over with. That was almost exactly the low day (Beginning of March, near my birfday, so I am remembering it that way rather than the exact date) and we made about a million dollars by accidentally timing. It was 100% luck.

I bet this thread only has the good stories in it because it would be too painful for the people who lost money to write about it. Is that what's called selection bias? (Real question, as I never understood that term.)

 

[mh]

I don’t know about heavily, but I kept maxing my 401k. I was fortunate enough in those years to to make too much to do a personal ira contribution. I also threw a chunk of money into Apple at that time, because I had some cash that I would not need for a good while. It was just laziness / luck that I had that extra cash though. I survived a Lay-off or two at that time. If I hadn’t, it would been a much different story.

 

[mh]

We had sold near the high point prior to 2008 by guessing and luck. I kind of thought this rise can't go on forever and got out of 100% stock and into 100% cash. Then when it crashed I watched with (sort of) glee and waited until I thought it couldn't go lower. My wife and I talk a lot about it and we finally decided to go on vacation and not think about it. On one of the vacation days we decided to get back in at the next down day so we didn't have to worry anymore and just do it and get it over with. That was almost exactly the low day (Beginning of March, near my birfday, so I am remembering it that way rather than the exact date) and we made about a million dollars by accidentally timing. It was 100% luck.



I bet this thread only has the good stories in it because it would be too painful for the people who lost money to write about it. Is that what's called selection bias? (Real question, as I never understood that term.)

I wouldn’t bet against you [emoji16]

 

[Mo Money]

I did not flinch at all. I continued to max out my 401K and invested my usual monthly amounts in my taxable portfolio. The downturn was a bargain-basement sale, in my view.

 

[SumDay]

Ditto on the "not opening 401(k) statements". I threw the unopened envelopes in the file folder, and stopped downloading data into Quicken so I couldn't even see what was happening. People at work joked about their "201(k) plan" so I knew we had to be down 50%, which I confirmed in 2010 when I finally opened them.

We were both contributing the max to our plans which was scary, but not as scary as DH's serious health scare during that time. That kind of kept our minds off the economy.

It has made me a bit less jittery about market fluctuations, especially right now. Stay the course...