How The Stock Market Plunge Has Affected Us – The Good, Bad & Ugly

It seems like wherever I turn these days I always get the same message: The stock market is doing down, really down.

At first, I didn’t really pay much attention to it.

After all, the experts say the market is correcting itself, and that things would get better in no time.

I just need to focus on the long term and not fret the little things.

However, whenever I log into my social media accounts or scroll down the Rock Star Finance personal finance feeds, I always see some indication or mention of a downward market trend.

People seem to be losing money left and right. And it’s not chump change either.

It’s in the hundreds of thousands of dollars.

If I lose $100 somewhere, I’d probably spend hours trying to find it.

I can’t imagine losing six figures in a month. I’d probably lose sleep over it.

I might get even bitter as well.

Who’s causing this market downturn that makes me lose so much cash over such a short period of time?

And I say probably because I don’t have that much money invested in the stock market to lose $100,000.

And I’m definitely not losing sleep over the stock market. That said, the market downturn has also affected us in various ways.

Our stocks

Mr. FAF and I are not heavily invested in the stock market. Mr. FAF thinks investing in stocks is like gambling. And I don’t have much successful, if at all, stock experience to convince him otherwise.

Bottom line, neither of us really understand the stock market and do not have much disposable income at the moment to tinker with index funds and such. However, we also have some stakes in the stock market through the following mediums:

1. 401(k) and 403(b)

Hubby and I have been contributing to our 401(k) and 403(b) ever since he started working full-time in September 2017. In 2018, we maxed out our contributions and intend to do so in 2019. We don’t check those accounts often since, let’s face it, we can’t touch it until we’re almost 60.

At one point in 2017, however, my annualized return was 13%. I was super happy and bragged to Mr. FAF, trying to prove to him that maxing out our retirement accounts was a good idea.

The last time I logged into my 403(b) account, however, the annualized return was an abysmal -15.59% for the whole year of 2018. In 2018 alone, I lost -$4,601.46 in my 403(b) portfolio. That’s a lot of money to be lost. But honestly, I don’t really feel a thing. And it’s because I can’t touch that investment until I’m almost 60. It’s not like I can withdraw my money before the market started tanking.

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2. Amazon stocks

Mr. FAF works for Amazon Web Services. He got 4 stocks after his first work anniversary. Unbeknownst to him, the company’s default was that 2 out of the 4 stocks were automatically sold to the market. We were pretty upset about that since we wanted to keep all 4 stocks.

At the time, the Amazon stock price was about $1,700. We also had to pay taxes for getting those 4 stocks vested. At the end of the day, we got about $1,800 after paying taxes for getting those 4 stocks from Amazon and selling 2 stocks.

Now we have 2 Amazon stocks. We don’t plan to sell those stocks and the amount is relatively low that we don’t really pay much attention to them. Mr. FAF won’t get more Amazon stocks vested until September 2019, so there’s no point in worrying about the market performance in the meantime. At least, I don’t care.

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Real estate

With the stocks not performing so great, I’ve seen a couple of personal finance bloggers turning their attention to real estate to diversify their portfolio and take more control of their net worth/cash flow rather than just wait it out for the market to return to its high.

That makes me think.

Both Mr. FAF and I want to buy another house for investment. In fact, we’ve been doing plenty of house hunting over the past year. The only thing we need at the moment is enough cash for a down payment and a good house at a great price.

In 2019, we will focus our effort on building the cash reserve for a bigger emergency fund and for the down payment. A good house will take us some time and effort to find. And a good price? A recession might help us with just that.

When the market is doing well, housing prices are crazy expensive, especially in DC. But when the economy is tanking, housing is more likely to be cheaper. And if we have a decent down payment and still keep our jobs, that’s when we will jump in.

I remember one time when Mr. FAF and I were dealing with the water leak in our basement, I just got so frustrated and asked him if he still wanted to invest in real estate, hoping he’d say no. I was so tired of repairs and maintenance issues and fighting with Mr. FAF about it.

Contrary to my expectation, he said, “Of course.” When I suggested we can just invest in stocks and not have to deal with repairs or tenant issues, he disagreed, “You can’t expect to make money without going through the trouble.”

Now that the stock market is not doing well, and people are losing money left and right, I’ve been thinking about what Mr. FAF said.

While we can’t control how the market is doing, we can at least have control over what house to buy, whether to hold it or sell it, and what kind of tenants we want to live in the rental. Even when the economy is tanking, people still need to live somewhere, and hence the stable cash flow (if you can find quality tenants).

Realization

And I realized that nothing in life comes easily. Stocks can provide us peace of mind when the market is doing well. We don’t have to do a thing and can just let the market do its job to bring us more gain.

However, when the economy is tanking, the losses can be astronomical. Losing $100 is not fun. Losing $100,000 in a month sounds painful.

Real estate takes work when it comes to repairs and tenants. But we have more control over our rental and can still get positive cash flow when the market is not doing well. Yet, it also comes with possible major costly repairs and potential lawsuits from tenants.

As I live longer, I seem to learn new things about the world. Stocks are one of them. And real estate is another. We live and learn. And that’s the beauty of life.

Related:

What Hubby & I Plan To Do When Reaching FIRE

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Why We Feel Under Pressure To Buy Another House

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3 thoughts on “How The Stock Market Plunge Has Affected Us – The Good, Bad & Ugly”

  • Thanks for sharing, Mrs. FAF.
    Yeah, for us, I know our retirement funds and other investments — though not massive — are taking pretty big dips right now. To be honest, we’re not even considering moving anything around since we won’t touch that money for decades. But still, it hurts to look!!

    • Losing money, especially in the hundreds and thousands of dollars, is def not fun. I feel your pain. We’re in the same boat!

  • I think with the stock market at a downturn right now, the one glimmer of hope during this time is that you know it will go back up at some point. It always does!! I read that the average return on the stock market is between 7-10% so it’s about waiting it out. I wasn’t even aware about the downturn in December until last week, that’s how I’m unaware of how the market is doing.

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