I know many have said this is not the place for investing advice, but I have a situation that I don't understand.
When I left JCP, I withdrew my 401K and pension, I rolled it over into an IRA with a well known investment company. Last year I did very well but this year has been horrible. I have said many times that I am only on this board for fun and to learn a little more about investing.
Last week one of my mutual funds paid an 8% dividend but I wasn't aware right away that it was a dividend. I usually look at the website daily just to see how things are going even though I have someone taking care of it that knows much more than I do. I nearly had heart failure because in one day I had lost a large chunk of money.
When I called my advisor, she wasn't aware of any problems and would do some checking. The next day she said that it's difficult to explain. This financial company doesn't show the dividends until 2 right away. This chunk of money was really not a loss. This company always shows the dividend as a negative and then 2 days later it adds it back on.
In 2 days, it was added back on and my total was back to where it was (give or take daily loss/gains). I accepted that explanation but didn't understand why I was only back to where I started. I should have gone back to where I started plus receive the dividend.
The way it was explained was that even though it was added back on, I basically broke even because the share price had dropped that same day.
Does anyone else see this being a little strange. Not sure who I should go to for advice.
Any suggestions would be helpful, and please, serious replies only.
I would be concerned that you sought advice here as about 90% of posters are dolts. Get an investment advisor or use Google. This is an entertainment media for a large majority of the time. Every now and then you might get a gem.
If you have an automatic reinvestment of dividends, your price per share should have dropped by 8%, and your number of shares should have risen by 8% (give or take daily loss/gain.) If you didn't have an automatic reinvestment, your mutual fund should have decreased in value, and your cash balance should have increased by the same amount. Just as your adviser said, it's a bit difficult to explain. Do you want the long-winded explanation?
Thanks yahutag. I do have it automatically reinvested. Now that you mention it, she did say something about the number of shares increased.
I was very happy that I hadn't lost a large chunk but was confused why it all came right back to where the dollar amount came right back to where it started.
If I understand this correctly, had the fund not dropped in price, I would have had a dollar amount increase. It all seemed strange that the financial company took the money out and then when I questioned it, it went back in. I just recently started watching it on a daily basis.
It all seems strange that the fund would drop at the same time as a dividend was received. I need to start paying attention to the whole picture and not just the end dollar amount. Last year I had a 23% gain. So far this year, it is less than 1%.
I will have to admit that I have learned a lot being on this message board. When I was working at JCP, I didn't pay much attention. I had stopped putting anything into my 401K the last couple years that I was employed. I didn't pay much attention to the ups and downs of the stock price like I should have, but I also could tell that the company was not doing well and I feared losing everything.
I still remember reading the pricing message board and how we were all excited that all of the horrendous amount of corporate pricing mistakes and the marketing was going to change when we learned of the CEO change. I loved my job and I was good at it, but I am much happier now that I don't have to deal with all of the stress that was involved.