My dad has an addictive personality. He drinks a bottle of red wine every day when he visits us in Portland. He likes Cabernet Sauvignon and it’s much more affordable here in the US than Thailand. I think a high import tax and the low demand cause the price to be quite high where he lives. He’s getting close to 70 and that’s probably too much alcohol at that age.
He also had a gambling problem when I was young. He used to go to Las Vegas all the time to gamble over the weekend. Now that he’s not making much money, he doesn’t gamble anymore. He is investing like gambling, though. He day trades and buys as many IPO stocks as he can get his hands on. He doesn’t believe in ‘buy and hold’, that’s for sure.
I think I also have an addictive personality, but to a lesser degree. I used to be addicted to video games and wasted a ton of time with my Playstation and Xbox. I had a long layoff from gaming, but since I got my Republic Wireless Moto X, casual gaming has been taking up more of my valuable time. Casual games are probably even more insidious than the video games of old. You can play anytime and the phone is always pinging me that my “troops are ready for battle…”
Stock Market Investing
I’m a little better on the investment side. I figured out my target asset allocation and I’ve been sticking with it. I believe in the ‘buy and hold’ strategy with our investing horizon (20+ years.) Well, I’m getting more conservative now that I’m a bit older and not making as much income. My asset allocation for bond increased from 5% in 2010 to 20% this year.
The problem I have is that I can’t stop investing. Recently, I sold some Intel stocks because it hasn’t been this high since the dot com bubble. I had a bit too much Intel stocks because I got them via grant, the employee purchase plan, and stock option plan. Intel made up almost 20% of our dividend portfolio at the beginning of 2014. I have been planning to sell some for a while now, but inertia was difficult to overcome. Currently, our Intel holding is reduced to 10% of the dividend portfolio and I feel much less exposed to the company.
However, the US stock market had a great run since 2009 and many analysts are expecting a correction (10%) or even the return of a bear market (20% or more) soon. Actually, we might be in the process now. The last few days have been pretty bad on the stock market. The DOW declined almost 4% and the S&P 500 went down about 3%. Anyway, I have some cash from the Intel stock sales and I’m itching to invest them. Actually, I already purchased 100 shares of Deere & Company. It’s really hard for me to stay on the sidelines and sit on some cash. Cash in the saving account is earning less than 1% interest and I’d rather invest them.
The stock market is volatile at the moment and my brain says I should sit on the cash for a while. My heart tells me to put everything back in, though… The last few years have been great to our net worth and it’s addicting to see the consistent increase.
I’m having the same dilemma with our investment properties. We just sold our rental home and 4-plex and I couldn’t sit on the sidelines. We did a 1031 exchange and purchased a small duplex nearby. It’s a sellers market in Portland and we couldn’t get a great deal like we did with our 4-plex in 2011. However, we will need a bigger place soon, so the plan is to move in eventually. The property is in a popular area with some of the better public schools in the city. The 1031 exchange also lets us defer a big tax bill (~$45,000) so I couldn’t say no. Mrs. RB40 doesn’t like being a landlord, but she’ll have to put up with it for a few more years.
Lump sum investing
I really don’t like having a lot of cash in my bank account. When I first left my job, we kept $50,000 in cash just in case we need it. After a year, we were still doing fine, so I reduced our emergency fund to around $20,000. That’s 4-5 months of our living expense. With the recent changes, our cash position crept up over $50,000 again. I’m itching to put most of that into the stock market, but it’s probably better to wait for a correction.
So do you think I have an addiction to investing? I don’t trade very often and I don’t even check the stock market every day. I just have a compulsive need to put our money to work. I guess there are many worse things to be addicted to. At least I don’t have a substance abuse or a gambling problem.
What would you do if you have a lump sum to invest right now?
Photo credit: Wikipedia Addictive personality