So, at the end of August, 2021, I opened a Roth IRA with Vanguard. I deposited my $7000, and promptly bought, 60/40, VTI, Vanguards total stock market ETF, and BND, Vanguard’s total bond market ETF. During September, 2021, I added some shares in Apple (AAPL), and by September 30th, my $7000 was now worth $6,566.46.
Lesson #1: Learn patience. Make sure you understand the state of the market before you dive in. I chose to start investing in August, going into September, which I would later find out is historically the worst month for stocks. Had I been patient, spent the energy on research, I could have waited until the market was down, and at least gotten more bang for my buck.
October and November were okay. I did some research, and came across a couple books by a gentleman named David Alan Carter, The Stock Market Cash Trigger, and The 12% Solution. I recommend both. Both books have links to Trendline Profits, his website. Both books, and the strategies they offer, are about matching or exceeding the market average, while mitigating the risk. David also has some other strategies on his site that are somewhat higher risk, but also offer much higher returns.
Let me stop here, and explain something. I got a very late start into retirement planning. I’d lost my job, and COVID hit. There were other challenges. I spent the next year contemplating what retirement was going to look like, and came to the conclusion that I had to get my butt in gear. Put simply, I was in a hurry.
I dove in, and immediately took a hit, which I recouped in October and November. What I should have done, at that point, was be patient, and get a feeling for the market before taking the next step. What I did, instead, was see the returns offered by David’s other strategies, and decided to jump in with both feet.
And then in December, shit got real. The market started a tumble, and my Roth went with it. Looking back now, I have to shake my head. My account was down less than 17%. The SPY max drawdown was 24%. It really wasn’t that bad, I was ahead of the game. But man, at the time? Big ouchie!
I never blamed David’s strategies. 2022 was just a weird year. American Muscle, one of his core strategies that I used, actually outperformed SPY during 2022. Of course, “outperforming” is relative. American Muscle returned -8.7%, while SPY returned -18.2%.
At the end of May, 2022, my balance was around $5500. At that point, I sold everything, and bought AAPL, reasoning that if nothing else, AAPL would still be around when the market recovered.
As time went on, I kept researching, and discovered dividend stocks, and discovered Simply Safe Dividends, a web site that evaluates dividend paying stocks, and assigns them a safety rating. Eventually, I settled into a dividend investing strategy of my own devising, and that’s gotten the Roth back on track somewhat. I’ll talk about dividends more in another post.
As of July, 2024, I’d contributed $21,500 to the Roth since August 2021. My balance at the end of July 2024, when I started the transfer over to Fidelity, was around $24,000. Not a stellar rate of return, by any means, but considering I was down about $1500 early on, I’m not feeling too bad.
It’s an ongoing journey. Next post, I’ll talk about my traditional IRAs.