I know this sounds like a dumb question, and I’m not sure if my thoughts on it are any less dumb, haha, but after seeing this tweet by financial blogger and author Jonathan Clements, I realized something about myself that I didn’t know previously…
That thing I realized?
That I don’t even *look* at how much an investment costs anymore, no less even *know* what I’ve paid for them!
Whenever it’s time to re-invest in my VTSAX I just pour in the money and then call it a day… I couldn’t even tell you what it’s trading for these days… $50/share? $100? (Just looked… $72.02 – right in the middle! ;))
I wondered why this is as it seems pretty RIDICULOUS, particularly coming from someone who’s obsessed with tracking his pennies, but after a little rumination it started becoming clearer:
- When I have the money to invest, I’m going to invest it no matter what the share price is, so whether I look at it or not it really doesn’t matter
- I never try to time the market anymore, so again no reason to check the share price…
- And lastly, if a good investment is a good investment, then it’ll still be a good investment when the price is higher or lower or somewhere in between – at least in the general sense (obviously if it drops 50% or something then something’s up, but with index/mutual funds it’s rarely the case compared to other less diversified or individual stocks)
- Oh, and then I also only invest for *the long term* – so the daily fluctuations matter less and less over time, although of course you prefer to pick up shares on the cheap in a perfect world…
And I should probably clarify here that when I say *investments*, I mean *stock investments* – not other kinds like rental properties or business opportunities or even handfuls of gold coins when of course you *would* want to pay close attention to the costs 😉 I’m crazy, but not that crazy!
And again I’m not saying my thoughts here are completely justified, or that even looking at the price in the first place is bad in any way (it’s prob. smart to be aware of, even if it doesn’t change anything!), it just shocked me pretty good when I realized I no longer did it anymore and was wondering why…
I literally couldn’t tell you the last time I even noticed a share price – can you?! Did you check the last price of the shares you recently picked up? How about when you last contributed to your 401(k)?!
Actually – 401(k)s are a perfect parallel of how I treat this investing stuff… With 401(k)s you invest your money every two weeks no matter what the prices are, the only difference is that it’s *automated* so you probably don’t pay attention as much compared to investing on the side.
But you DO know investing is important because it all adds up overtime, so you continue pouring it in without second thought even if you don’t know exactly how much you’re paying for them. If anything, you’re more aware of the fund *fees* than the share costs since that’s the biggest part us bloggers like to harp on! Haha…
All this is important to think about because it means deep down you really DO want to be invested and not obsessing about the ups and down like day traders do, but you also want to know you’re doing things at least 80% good which is why 401(k)s – in my opinion – are so beneficial. You just set it up and forget it, and then watch all that money and their respective matches compound over time and voila! You’re left with a nice nest egg!
So why not apply that same mentality to your outside investments too?! It’s not like you’re always going to be paying top dollar for investments just because you’re not paying attention to their prices… Some buys will be high, and others will be low, but over time dollar cost averaging will more than work out in your favor and is all better than waiting for that perfect time that may never come…
At any rate, that’s my latest epiphany and thought you might get something out of it… even if you think I’m a complete whack job now and never want to read the blog again 😉
I’m still processing it all, but would love to hear your thoughts about this, and especially if you don’t pay attention to the share prices when you’re investing either, haha…
I KNOW I’M NOT ALONE HERE! Someone back me up!!
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from Finance https://www.budgetsaresexy.com/do-you-pay-attention-to-how-much-you-pay-for-an-investment/
