The Race to $1 Million is a monthly series where Kevin McKee and The Hoff post net worth updates. The first person to reach $1 million in household net worth wins an undetermined prize.
Can I get a “WOOT!” for the stock market this month.
Holey freaking baloney this month was awesome. I can’t hold back any longer, so here’s the update for November:
That’s right. Not only did my net worth increase by over six grand, but I also gained close to $900 on The Hoff. Sweeeeeeeeeeet!!!!
How Did I Make So Much Money?!?!?!
How on Earth can I make $6k in one month? Maybe I’m dealing drugs. Or maybe I took out a very large renter’s insurance policy and then had an “accidental fire”.
Nope. I didn’t do anything special at all.
You may remember two months ago when I lost $6,555 in one month. I came up with a highly controversial plan of action; change nothing!
There are some things in life where you need to change directions when it starts going bad. For example, if you’re driving on a very tall mountain and you find yourself off-road going toward the edge. Changing direction would be a very smart thing in that situation.
But with the stock market, if you are investing in good companies with solid fundamentals, a dip in price is just a temporary sale. The company will most likely go back up eventually and you will get your money back. And if you don’t believe me, see Kevin McKee in Sept 2011 and Kevin McKee in Nov 2011.
Now imagine if I had freaked out. I saw my net worth drop over $6k and decided the stock market is too risky for my money. I decided to cash out and put my money under a mattress.
I wouldn’t have made all that money back this month.
Nobody has ever made money in the stock market buying high and selling low. Don’t freak out over temporary market losses. If you hold on long enough, there’s a darn good chance you’re going to get all your money back and then some in the long run.
One Year Net Worth Graphs
Here are the details of my net worth over the last 13 months. If you want to have a super sweet spreadsheet with awesome graphs like this, just download my net worth tracker (free, as always) with instructions here and start doing it yourself!
Student Loan Debt: Just over $15k. I won’t make any serious progress against this until early next year, but I am working very aggressively to save cash and pay these down in large sums.
401k and Roth IRA: Both are still lower than their March/April peak this year, but definitely looking much better than they were in August and September. If they go up, great! If they go down, I get to buy more stock cheap, so great! It’s really a win-win.
Overall: I think an average month in the stock market will put me over $30k for the first time since April. I started the year at $18,847, so if I can finish above $30k, that’s an average gain of about $1,000 per month. I’ll take that.
Click the image for a full size view.
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
Good decision to do nothing. The question is, “Did you add to that investment and profit from the rebound?”
Yes, I did add as I went into the 401k. Every paycheck I add 6%
Congrats on gaining some ground on the hoff – he’s totally been slacking! Love the “do nothing” strategy – way to sit tight, ignore your emotions and ride it out.
Yep, it’s a great strategy because I have a sell point in mind and until my biggest holding hits a certain point. Anything under that just profit.
Nice job on gaining some ground. I like your net worth dashboard. I need to setup something similar.
You don’t need to set up something similar. Just use the spreadsheet I use. It’s free!
Nice win! yeah, buy on those dips!!! Dollar cost averaging wins over the long run 🙂
Love me some DCA!!!!
Nice! Btw, how did u come up with the Hoff’s NW?
What about them pretty graphs?
I just ask him. He doesn’t track his net worth on the same spreadsheet I use. He probably should though. I’ll yell at him about it.
Have to make sure The Hoff isn’t cheating!
Congrats on the huge gain. Do you ever consider selling out to capture the gains (although today 11/9/11 WOULD NOT BE THE DAY TO DO IT).
Nice dashboard. I’ve taken advantage of some sales myself.
Could it be that the Hoff had some alcohol/burger related emergencies?