2022 has been a tough investing year for us. As someone who personally experienced the frustration and stress of losing money in-spite of doing the seemingly correct things like “Staying the Course” , the last year has tested our family’s Conviction. When the value of an investor’s portfolio declines, it can be tempting to second-guess their investment decisions and consider making changes to their portfolio or strategy. With the start of this new year we have decided to focus on the positives:
1. Higher returns on savings: We took advantage of the treasury rates going higher and moved our money from a big bank’s savings account and bought treasury notes. Being in California gives us an added advantage of not having to pay state taxes on the interest. This has been an easy win. We also moved our emergency fund to an online savings account offering more than 3% interest rate. Higher returns on savings can also lead to compound interest.
2. Stronger currency: We visited India and Dubai for my brother’s marriage in December. We have been planning this four week trip for a long time and it was a major expense for us. With the US dollar now stronger relative to other currencies, we were able to get more for our money when traveling abroad. This has been a favorable headwind for us. We could afford a few more experiences in Dubai such as a luxury Desert Safari, visiting the tallest building in the world, Visiting the largest water park in the world. All this made the trip even more memorable.
3. Bigger car: Buying a car in cash in a high interest rate environment can be a good way to save money on financing costs and potentially get a better price on the car. Our 2014 Altima now feels small and lacks many security features like a backup camera. With multiple online used car retailers near bankruptcy due to decreased demand caused by high interest rates. We are keeping an eye for a pre-owned SUV which we can buy all cash. We are hoping to get lucky with a nice car deal this year.
4. Stocks and bonds are cheaper: If you spread your wealth and have a diversified portfolio, 2022 was a painful correction but it could have been a lot worse. We are grateful to have not invested in some of the high flyers of the previous years and stuck to our index funds. With their unit values down, we end up getting more units in our weekly purchases. In personal finance, everything is relative. We feel our passive investment style has helped us lose less money than others relatively. We see this as a small win.
I hope 2023 turns out to be better,until then, Let’s try and look for the positives.