First Person: Why I Stopped Trading Stocks

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First, the news came out that 401(k) balances had broken a record since the Great Recession. Now, Fidelity Investments has announced IRA balances have hit a 5-year high. Although I used to trade stocks on a regular basis, I've decided to throw in the towel. I have simply stopped trading. According to a recent article by CNNMoney, people between the ages of 30 and 39 saw the biggest increases in their balance. Their investments shot up 105 percent between 2008 and 2012. Even though my husband and I have enjoyed some of the stock market gains along with our peers, my trading didn't bring us stellar returns. Fortunately, I can choose other options besides individual stocks within my Rollover IRA and Roth IRA accounts such as index and exchange traded funds. I can also save cash and pay off my mortgage so I have a solid real estate investment.

Taking control of our investments

According to Fidelity, 401(k) balances hit a high of about $77,000 in 2012, which was 12 percent higher than the previous year. The average IRA balance at the end of 2012 was about $81,000. I had about $75,000 in my 401(k) when I decided to roll it over to a Rollover IRA. I like being able to pick and choose which ETFs and stocks I want within my IRA since my 401(k) offered only limited choices. I pay a small commission fee when I use my online trading account through a discount brokerage firm.

Keeping some money in cash

A recently read an article by the Wall Street Journal about the "cash conundrum." Some investors are boosting their cash positions because stocks seem overvalued. As a do-it-yourself investor, I share the same conundrum. I'd typically look for a bargain, but can't figure out which way the markets will blow. According to the article, value investors run the risk of selling too early. No one wants to miss market gains when stocks are soaring even if the charts and research say it shouldn't be happening. As an everyday investor, I can't risk losing a large portion of my retirement money so I keep some in cash.

Paying off my home, too

With home prices up 12 percent compared to one year ago, I'm starting to finally see some appreciation in my Florida home. All of the appreciation in my home came from paying down my mortgage since my home is still not as worth today what I paid for it during the housing bubble. Experts would say I could have made more money by investing in stocks in the past five years rather than investing in my home. According to my IRA account, I made 15 percent this past year. With a 2.75 percent interest rate on my mortgage, it's obvious I'd have a higher net worth if I'd invested in stocks. However, my house is a more secure investment headed into the next five years. I don't have to worry about my home unless it gets swallowed up in a sinkhole. I'm much more concerned about the sinkholes in the stock market.

With all the upbeat attitudes about housing and the stock market, I'm beginning to wonder if it's all a bunch of irrational exuberance. I hope this optimism lasts a little longer. In the meantime, I'm going to let the market do its thing and get out of the way.

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