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Loosing focus

March 11th, 2008 at 03:49 pm

It is really difficult to stay motivated to save when savings interest rates keep going down, my IRA has taken a severe beating since October, and prices of food, gas, utilities, etc. are going up.
ING rates dropped to 3.10 per cent and the old savings account is not making a lot of progress now.

How do you keep your focus when it all seems to be going downhill?

5 Responses to “Loosing focus”

  1. PauletteGoddard Says:

    Deep breathing, and slowing the pace if need be. We've got to remember we're not the only people to whom this is happening. We might not be able to contribute as much as we'd like right now, but the practice of contribution should go on. I also try to make a little bit of time scouting out what IS going up. I remember feeling very demoralized in fall/winter 2002/2003, when my statements showed diminishing balances. Buck up! Never say die!

  2. Broken Arrow Says:

    If not motivation, how about desperation?

    In times like these, it is more important than ever to stay on target financially... because the margin of error is growing thinner and thinner still....

  3. reflectionite Says:

    you could always move to australia! Big Grin (interest rates are about 7-9% here)

  4. baselle Says:

    I agree - there's nothing really appealing that makes me want to put money into it. Let me share a little saying:

    Sometimes its not about the return ON investment but the return OF investment.

    You're making less interest, but at least your principle is safe.

  5. merch Says:

    My 2 cents. I would review your allocation across asset classes. For simplicity, letís say you invest in US stocks and International. When you initial set up your allocations, you wanted 80% US and 20% in international. Today, the ratio may be 65/35. I would reallocate to be back to 80/20.

    What does this do? The first thing is that you are selling some of your winners to buy underperforming asset classes.

    If we broaden this example to bonds and money market accounts (less risky investments), the movement in the markets might have changed the amount of risk we initial thought. An example of this is that we have two asset classes in our portfolio: US bonds and US stock. We start with a mix of 80% stock and 20% bond. The market takes off like in 2000. We may find that we are now 90% stock and 10% bond. Our portfolio has just become riskier then it was before.

    What I am doing is looking at the allocation of portfolio and rebalancing my allocations.

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