Friday, November 14, 2014

Risk taking

These last two weeks my skills in math have moved to the forefront.
Math is not my subject, nor is writing.
History is my subject.
What people do in long and short history is all about risk
Lincoln risked with emancipating slaves.
Pharaoh risked keeping the Israelites too long.

My dad, who passed away eight years ago,
risked money on four things:
himself, his family, real estate and bonds.

Currently our risk is straddling two houses.

We have invested as long as we have been married.
Our first investment was a "penny stock".
We were really investing in an idea, no physical company.
There were a number investors of who jumped in,
And when it closed we all lost.
It was an idea before it's time- 3d printing.
They just could not generate the capital to bring the science to the table.
It wasn't a lot of money, but it was our savings at that point.
Learning experience (I first wrote, "Stupid")

We entered mutual funds, like everyone else our age.
In twenty years we faithfully put in 120 a month.
The fund grew. We consistently made 10-12% (of which the government took their share).
We happened to cash in before the fund dropped by half.
Whew.

We bought a house with cash from that and an inheritance.

We then went into single stocks.
We should have bought Google instead of QualCom
Lost a lot in the dot com bust.

Left the market.
Rejoined
Won
Left
Rejoined
Lost
Left

Recently rejoined
Back to 10% interest- but in our Roth.

My husband and I chatted the other night.
Neither of us would ever go to Vegas and gamble away $2000
We do it on the stock market.
We somehow feel, over time, we will get it back.
Last large loss took eight years to recover from!

Lots of risk for long term gain.
Very diversified at this point.

We are now pulling lots of our savings and purchasing a second home.
It will be our primary home, but currently it will wait for us.
Why risk it?
 Neither of us feel confident enough
to leave all of our money in a market that feels so risky
and out of control of small investors.
Put the retirement money someplace pretty safe.
The housing market already bottomed.
We think.

What is risk and what is our tolerance of it?
Right now it seems we are willing to take risk with very tangible things.
Higher stakes gambling is not currently my cup of tea.
I hope our risks will keep us on the road we need to stay on.

Gosh, my stomach hurts!


2 comments:

Tom Sightings said...

No question, there's a lot of gambling that goes along with investing in the stock market. But here's the difference: In Vegas, they pay back 92 - 93% on the dollar. On Wall Street they pay back 105% - 108% on the dollar. So, better odds.

RAnn said...

Have you been reading about my latest investment find on my blog?