Monday, April 10, 2006

One More Financial Touchdown

Just over a week ago, I wrote My Top 5 Financial Touchdowns. Well, as I thought about it more I realized, I missed one! Shifting my 401k allocation to Treasury Inflation Protected Securities (TIPS) fund in 2002 (I think, I tried to look up the specific records, but apparently my 401k site only hold detailed data going back to 2003). When I think back on it, it was very uncharacteristic of me, and actually a little stupid, but it paid off. I was down approximately $4,000 in my 401k. Considering I only had about $20,000, this was a pretty big chunk. Part of the reason was I was invested heavily in my company stock, not a good move. Well, I look at the performance of various funds available to me in my 401k, and TIPS were available. I transferred 100% to it, and it paid off. The TIPS fund rose over the year, by around 20% I believe, making back what I had lost, even gaining a bit by the end of the year. Sorry I don't have the specific numbers, but the lesson I learned is that sometimes you just get lucky. Really I did just get lucky. It was the perfect time...Of course had I switched earlier, I would've made even more. Then again, my current investment in TIPS has led around a 2% decline this year to date. So...As I'm getting older, I'm learning risk minimization is important, and having my entire 401k locked up in one single fund is not a good most situations. Now to diversify...

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