Remember the movie, “Up” by Pixar? The talking dogs were hilarious. “Cone of Shame” and “SQUIRREL!” have been inside family jokes ever since.
When it comes to my financial plan, I am guilty of being like a dog who hears, “SQUIRREL”. My head swings around and I focus on the new shiny object before me. Fortunately, I will pause as I research the new idea.
This happened last week when I thought about revising some of my savings buckets. Fortunately I re-read my financial plan and realized it wasn’t in the plan. My idea for short-term gain would have a far greater long-term impact.
This week, I was listening to a podcast by Howard Clark. Betty (Chambers on the Road) recommended his website. Thank you for the recommendation! Howard mentioned during a Q&A about having made $4,000 profit by buying his car when it came off lease and reselling it. A listener turned around and made $8,000 profit using his advice.
Let me just say that I am not a fan of leasing, but I digress.
I jumped up on Kelly Blue Book and found out that my 2017 car with 77K miles has increased by $3,000 in value over the past year. That’s crazy! That is a 25% gain for a depreciating asset. Truly the world is upside down these days.
My car is paid off, so I immediately thought of the following plan: buy my electric/hybrid now, get the federal tax credit and I will be driving a brand new car for no more than $260 a month! It makes perfect sense.
However, there are two issues: 1) that is not the current plan that my advisor and I mapped out. SQUIRREL! 2) I am going to have a heck of a time finding the car I want. There is a huge waiting list for hybrids.
Reluctantly, I decided to continue to stay on my course. This does not involve trading my car in for a new one. My plan does not involve reducing my retirement and HSA contributions for a year. I have to remember the compounding I will lose if I do this.
I did make one shift. I removed my initial investment out of the stock market. I have invested about $4,500 over the past year. I cashed that out, but left in the gains. I have done extraordinarily well in my index fund and made a ridiculous return (+30%).
Normally, I would just ride that ride because I don’t mind the ups and downs. However, since I am looking to purchase my home and all the investment gurus agree, my down payment monies need to be in a safe haven. My aggressive index fund is not a safe place.
Last year, during the scary early summer of the pandemic, I thought about investing in REIT’s (real estate investment trusts). My thought was maybe apartments. Retail and hospitality made me too nervous.
Silly me. Many Retail and Lodging REITS had returns between 75% to 195% over the past year. Rats. I should have invested. Woulda, coulda, shoulda.
My instincts are generally pretty good on these trends. I think perhaps I should set up a brokerage account with funds specifically for these crazy ideas.
I had a work colleague who would invest in some one-off stock and watch its ups and downs. His strategy was once it hit a certain pre-determined point that made him feel like he got a great return, he would pull the initial investment. Then the ups and downs were happening only with his gains. I liked that strategy.
Let me pat myself on the head and give myself a treat for resisting the allure of the SQUIRREL!!