You Make The Call on My Investing Decision

Ever wanted your chance to call out a financial advisor? Here is your opportunity.

A few years ago, I contemplated making a big investment while taking on a huge risk. In the end, I opted to not do it, costing me a pretty penny.

Did I make the right decision? You be the judge.

Let me know if you think if I’m a:

  1. Investment Schmuck
  2. Financial Guru
  3. Non-Stock Buying Sally (Wussy)
  4. Your own PG-13 Description of My Investment Decision

Let me know what you think in the comments below.

Identify 1, 2, 3 or 4 and your brief reason as to why.

Can’t wait to see your feedback! :)

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Comments | 15 Responses

  1. says

    Good post!

    2. It’s a struggle to know when you have “enough”, and if you’d bought GE then today you’d be struggling with the decision on when to sell it. More importantly, you couldn’t afford to bear the consequences of even the remote chance of a GE breakup or bailout, let alone a bankruptcy.

    I guess the real lesson to learn from this would be setting aside a separate “dry powder” fund for just these situations. Maybe you’ll find a real bargain this month and make 200%. Or maybe that fund will sit around for a decade earning 1% while waiting for an opportunity…

    • says

      The one thought that kept coming through my mind was, “Can GE really go bankrupt or become nonexistent?” Most people would scream “Never!”, but in the past few years we’ve seen companies such as GM and Wachovia stock become worthless.

      Thanks for the comment and stopping by!

    • says

      See – Woulda, Coulda, Shoulda… Not!! I wouldn’t have even been looking at it in the first place, so I wouldn’t have known, now, that I made the mistake in the first place. Maybe that’s putting blinders on to other investment options, but you made the best informed and educated decision, and as well all know risk has its rewards, but you could also be cryin’ in your beer right now… and have to look at your wife and say “oops”… No way… I think you did the exact right thing. Your mistake was looking back and wondering ‘what if’!!!

  2. John Boggess says

    4. The Only Safe Decision You Could Make at the Time

    Hindsight is always 20-20. NO investment is a sure thing and you could well have been putting your house in jeopardy if GE had gone the other way for some number of months.

    There are times to take risks, but you chose safety and security for your family over the POSSIBILITY that things might get better.

    Good choice!

  3. says

    This must have been a tough decision. I think you made the right choice. If you felt secure enough taking from your emergency fund, you would have done it (I am guessing). But, you didn’t -probably because you didn’t feel secure enough. My motto is that you should use the stock market to invest for the future and only invest what you are willing to lose.

    With that said, I kick myself for missing out an opportunity that has quadrupled from the first price I saw a certain stock at.

  4. cgirl says

    3) Non-stock buying Sally

    I think that taking 1/3 of your emergency fund was too much.

    But what would have happened if you’d have taken 1/6 of your emergency fund and invested that? To my thinking if 33% returned between $50-75K, wouldn’t 17% have returned between $25-35K?

    However, I should point out that as of yet, I’ve never bought any stock. I’m trying to find something to inspire (goad?) me to take that first step.

    Is there a reason that spending 1/6 of your emergency fund was NOT an option?

    • says

      That’s a very good point and one that I never considered (but maybe should have).

      Part of my flawed logic was this:

      If I took 1/6th, like you mention, then the reward wasn’t worth it to me. I know that is flawed in every sense of the word, but that’s why I opted to nothing with my money.

      Well, not “nothing”. It did prompt me to write a post about it 2+ years after the fact and let people rip on me for it :)

      I think your logic is spot on though. Thanks for the comment!

      • cgirl says

        Thanks. I’ve been wondering about small scale investing lately. I’ve been putting money into mutual funds in my Roth IRA, but would like to get into investing more. Is investing $200-$500 (an amount that the hubby and I could afford to lose) a realistic option?

  5. says

    Hindsight is 20/20 so in that sense of course you should have bought it. That said, I think you made the right call. The last time you want to be rolling the dice with your e-fund is when you are in the middle of a transition, which you were with your house being built.

    It stinks now knowing that you could have made all the money but you had to make the decision with the information you had at the time.

  6. says

    4. Brilliant to know when you can afford to invest and when it’s best to sit on the sidelines.

    Investing has it’s risks. If you can afford to lose the money and not put your financial house in big jeopardy then go for it. But if making an investment is putting your house and family at risk then your better off playing it safe. The only exception to this is if you are young, single and will have the opportunity to rebound if the worst case scenario happens.

  7. says

    With the large drop in equity prices and big gains in treasuries, you probably should have just done a normal rebalancing. GE is a big stock, and highly correlated with the market as a whole. If you had sold treasuries and bought the S&P 500, your money wouldn’t have tripled, but you still would have done very well.

    Your emergency fund is an emergency fund for a reason, and you may have been right to not change you asset allocation. But you definitely should have been buying stock.

  8. says

    Well since we are talking Fantasy Football, I will go ahead and Monday Morning Quarter Back this for you.

    In hind site you are a stock buying sally :-)

    However, you should never make an investment you are not comfortable with, and things could have just as easily gone the other way. I think Cgirl made an interesting point though. Maybe throw a much smaller piece of your cash at it, just to satisfy your gut that says it should go up, without the risk of potentially putting yourself in a major financial bind.

    Stock buying sally… funny stuff.

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