October 05, 2008
Choices and Consequences
As the economy shudders, financial decisions I made years ago appear in a new light. I kicked myself when I had to sell my shares in Merrill Lynch in the late 1990s -- but now, that's not such a bad move, since, given the glacial pace of change in my investments, I no doubt would have hung on to September's bitter end (I still have 10 shares of GM, the remnant of 100 shares that I inherited from my mother in 1985. Those dividends ain't paying many bills these days).
Wherever I worked, I always opened a 401-K. When I changed jobs, I left the 401-K at the old job rather than rolling it over to another account. Over the years I collected four or five such accounts, on top of plain old IRAs. I could barely remember the passwords on the accounts, much less rationally manage them. I had multiple variations of S&P 500 index funds, some more aggressive funds, other odds and ends, the equivalent of a junk drawer with any old stuff thrown in. They were like old ratty blue jeans -- hard to be rid of.
Until . . .
. . . I chatted online with somebody in early 2007 who worked on financial matters for a law firm. I mentioned my sentimental junk-drawer approach to retirement savings and she wrote, approximately, "Are you nuts?"
That conversation started me thinking. She was right. My approach was screwy, with money spread all over. I decided to roll one over to a place where I keep IRA money. Then two, then three accounts rolled over to the same big fund firm. I left only one 401-K in place with a former employer, because the amount was small and the investment options unique.
I thought the money would transfer into equivalent mutual funds, such as S&P 500 index funds, but no -- they went to money market accounts. Sloth combined with caution to leave much of the money there, with some transfers to index funds. I never could get myself to jump all the way back into the market. When the Dow hit 15,000 I knew I'd kick myself, but something held me back.
So here we are, in meltdown mode, and instead of being up to my eyeballs in stock mutual funds for retirement, I'm only up to, shall we say, my pipik. I took the same approach with non-retirement savings, being so cautious that when I finally got my grubby, sweaty hands on them post-divorce that I left a third of them in cash, and there the savings sit, not gaining much, but not sunk into a depreciating Connecticut condo, either.
And I owe all to one exclamation in one online conversation that steered my financial fate away from the rock-strewn rapids toward boring, calmer waters. Talk about the wings of the butterfly effecting the world . . .
Van | 10/05/08 at 03:16 PM | Categories: Life and how to live it
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Municipal Bonds. they are paying rates equal to Treasuries, and your taxes will be going up.