This month I had my biggest one month net worth drop since I’ve been tracking my net worth, even if the current rally sustains itself. The total drop in net worth across all my assets, retirement and non-retirement, is equivalent to about 4 month’s worth of salary. In either case, I’m an optimist by nature and looking to the silver lining in all this. The stock market has still managed to treat me well in my short investment life, the paper losses I’m taking right now were just a month earlier, paper gains. I’m in for the long haul. However, unlike some other people, I don’t think this is a pure opportunity to buy. While I have no plans for distressed sales, I do not believe all the excess in the market has been worked out. There are serious questions on how the current credit and housing crunch will affect the global economy. Until there is more certainty, I will let my uninvested cash remain parked in safer investments. I’m only comfortable with holding cash because I have alternative plans for that cash. I expect a housing downturn, and want to be ready to swoop in to either purchase a residence for myself or sn investment property. I would say if you don’t have alternative plans, it’s not a bad time to put together an investment plan. 

In the last couple months the swings up in my net worth have been much more attributable to swings in the market rather than any spending or saving on my part. In a market that’s moving up, this can lead to false sense confidence, and makes one forget how critical earning money outside of investing is. While investing needs to be important part of everyone’s money management portfolio, stable income for most people remains more important. It’s important to have source(s) of income that allows you to invest when the market is down. This is true of the stock market as it’s true for real estate. A stable income provides that.