A Home Inspector’s Weblog by Frank Schulte-Ladbeck

exploring homes and the lives in them around Houston

A Financial Reassurance

A short post today is in order. I have written before that new homeowners should consider setting money aside for repairs in an investment account, and considering the market of late, I thought that I should write a little reassurance.

I invest each month a small amount no matter the market, because I am looking at the long term. Too many people focus on short term gains, instant gratification, or the feeling that they need it now. This can be the worst thing for your finances. I know someone who was planning to start her own vegetable garden, and she thought of all the food that she was going to can. In one weekend, she went out to buy everything to create her garden beds, and all of the equipment for canning, drying, and vacuum packing her produce. The garden turned out to be too much work for her, and she thought that maybe she could go to the farmer’s market with me to buy items there for canning and preserving. She never did. The beds have reverted to grass, and the equipment was given away. The excitement of the moment has passed.

Investing can be thrilling when you first start, and you see those gains. When I began, I was on the hunt for a fast rising stock, and I thought that I found one. I placed my bet, and watched as the stock rose quickly over the next two months. I knew nothing about the company, but I had seen good reports about it from analysts. Then one week, the stock lost half of its value, and it was going down fast. I sold as quickly as I could, before I lost any more. It turned out that the firm had been cooking the books, and an audit had revealed that fact. That is why I suggest to new investors not to go after riches. Invest in a good bond tracking stock like Lehman’s AGG fund, and to place other money in a stock tracking the S&P500. Yes, the S&P stock is down now, but the bonds are up. You should not be using that home repair money, unless there is a real need, so do not panic about the stocks. They will eventually rise again.

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