Over the next week, I will have a few posts on some different investment ideas. Yes, I work at a bank, but I am no expert in the area of investments, but I enjoy learning and researching the many different types of investments that are available. My hope is to share with you some of what I’ve learned.

This first post will deal strictly with the mindset that you need before you start investing in the market. I have been “in the market” now for almost 2 years. I wish I would have started about 4 years a go on the day that I got out of college. I would not have been able to invest a lot since I hardly made enough that first year to cover the bills, but I could have invested something.

Here is a brief overview of my current investments. The next post will go into more detail on these different types of investments and the benefits and downfalls of each.

Overview
I started contributing to a 401k through my employment at the bank as soon as I was hired. Not knowing what I was doing or how much to save, I contributed the “default” amount to my plan. This was only 3%. At this rate, I could retire at 165 instead of 65.  Once I realized that 3% was not much, I made a significant change in this percentage. After I had been there for almost a year I was eligible to contribute to our company stock. Here is where it gets a lot sweeter. Our company does not match any contributions to the 401k, but they will match $.50 for each $1.00 I contribute. However, I can only contribute 5% of my yearly salary to this stock option plan. I also opened a mutual fund account with another company during this time. This was not a tax sheltered plan (meaning that I have to pay taxes on whatever I earn), and I contributed to it monthly after an initial lump-sum investment. Finally, I recently started contributing to 2 Roth IRA’s for my wife and I.

The mindset needed to invest
When I first started contributing to my 401k, I did not pay much attention to what was going on. I chose my investments and left it alone. Mainly because I did not know how to check anything or monitor the progress. I just knew that money was coming out of my check each month and that was enough. Once I opened the mutual fund, I became completely obsessed.  I went to the website and checked it almost every day. I was focused on my rate of return and how much money I had earned. Well, from day 1, I lost money. It seems that since I’ve been “in the market,” I have done nothing but lose money. It’s not because my investment choices aren’t wise or smart, it’s just because the market in general has performed very poorly. Becuase I was losing money, I didn’t want to contribute more money. I did continue to contribute, but it was driving me crazy. It was always on my mind. Obviously, this is not the mindset needed to be a succesful investor.

To make matters worse, between February and July, our company stock has dropped over 35%. This is pretty typical for bank stocks. Obviously this is only a small part of my investment portfolio, but it still hits hard. However, it finally seems to be coming back up (it’s up 5% just today.

Let’s fast-forward to my current mindset. In a nutshell, I don’t worry about it anymore. Yes, it really sucks that the market has been so bad, but there is nothing I can do about it. I feel confident that I am invested in the right funds. I’m not extremely aggresive, but I’m not conservative at all either. For my age and the length of time until I retire, I feel that I am in the right place. I have 30-40 more years to be invested in the market and based upon the history of the stock market, I can be 100% sure that I will earn back everything that I have lost in the past year. Even more important is the fact that I am able to buy many more shares with the same amount of money than I was before. I still check my balances, and the rate of return on my accounts, but not nearly as often. I only check the rate of return every couple of months. It doesn’t do me any good to be obsessed with each individual account each and every day. Don’t freak out when the market is going down. It’s going to come back up. But don’t get greedy when it’s on the way back up. Find a plan and stick with it for the long run. Invest wisely, and trust yourself. Find something that works for you. If you are a conservative person by nature and can’t handle the risks of the stock market, then invest accordingly. Finally, remember this: It’s a marathon, not a 100-yard dash to retirement. You don’t get rich overnight. It’s a very slow process and it requires a lot of patience.

Simply put, the most important thing is to START NOW. Don’t wait another day.

Next up: What’s a Roth IRA and where do I get one from?