How I Learned to Invest and When It All Made Sense

I have been investing for 15 years…but it has just been a little under 6 years ago that I truly learned how to invest

Throwing money at an investment and knowing what you are doing are two completely different things.

How I Learned to Invest – The Day It Clicked

The day was March 3, 2009. It was just a few days before my 2nd anniversary and a few months before my first child was born. I remember because it is still on my outlook calendar plus I also made a comment on my Facebook page that day about the new information I learned about investing.

My work flew in our investment consultant from California to talk to everyone who was freaking out because all their money and retirement were disappearing before their eyes. It was a Tuesday and I was signed up to attend the 11 am meeting in the big conference room. It was packed, I had never seen so many people turn out for a voluntary meeting. That day changed my financial life forever.

The Day The Market Bottomed Out

Do you know why it was even more important? Know what happened six days later on March 9, 2009? March 9, 2009, was also the day the stock market bottomed out. No one knew it was the bottom at the time.

  • Dow 6507 (Down 7657 points from 14164 on October 9, 2007)
  • Nasdaq 1268
  • S&P 676

After that meeting with the consultant, it finally clicked for me. For the first time someone put on paper what happens during a crash and what to do instead of freaking out…now was the time to jump in with anything and everything you had.

It was the exact opposite of what I felt like doing. Instead of pulling money out or changing investments I was being told to keep it in, give even more, and go stock-heavy. So I did it.

My Facebook Posts from March 3, 2009

Lance: “Just listened to my work’s investment adviser explain why a delayed recovery for the economy is better for my 401k.”

Then my ex-girlfriend (hooray for Facebook so ex can stay in our lives) remarked:

Camille: “Oh you should share that with us all. I would like to know how it is better for my 401k.”

So, I replied:

Lance: “They just presented 3 different scenarios. What happens if the economy turns around now, what happens if it turns around in 4 years, and what happens if it just flatlines from here on out? Plus, they just showed what would happen in each case for each type of investment group (high, medium, low) in each case for each age group and if you kept your same investments, decreased contributions, stopped altogether, or transferred your current supply to cash investments.

Basically, the person who keeps steady investments, heavy in stocks during a delayed recovery will get cheaper (and more) shares for four years before a turnaround thus giving a greater return in 10 years than if the economy turned around immediately because the price of shares would start to increase thus decreasing your buying amount.

Transfer to cash or stop contributing only guarantees losses at this point. Why pull out now that you’ve endured the risk, why would you not wait for the return?

Plus they showed a chart for recovery of a 45% loss. Basically, if you transfer to cash/bonds for a rate of return of 2% it would take you 30 years to recover your loss and with inflation, you are basically screwed, so basically there is no benefit at all to transferring your money. Just take advantage of the market prices at this time.”

Blissfully Unaware Investor

I was cruising along blissfully ignorant of my retirement situation. I have always been good with saving my money and being frugal, I learned that early in life, but I was not comfortable with investing. I was making and saving good money but missed a ton of opportunities while younger in life.

Yes, I was putting money away in retirement accounts. I was anywhere from 5-7% at most times and feeling pretty good.

Going back to my account I was at 5% during the downturn so I pretty much missed everything from October 2007 to March 2009 since I was just at 5% on the way down. My company also kicked in a good amount, but I wasn’t doing my part since I panicked at the time.

Maxed Out From That Day

I have maxed out my Roth and 401k since March 3, 2009. Do you know what happens when you max out and invest $138,000 over nearly six years plus your company kicks in another $65,000 to your account during that time? Of course not all of it at the same time, but all of it as the market climbs from the bottom to where it is today. It changes your financial life forever! 

When did it finally click for you about investing?

Leave a Reply