The Full Motley -- 1Q, 2018

I have been looking forward to this update for quite some time for two major reasons!  First, today is the ninth anniversary of my blog.  Back in 2009, I doubled the percent of my income going into my 401(k) because the market had fallen so low and I wanted to put more money in when the market was downtrodden.  My expectations, best as I recall, was that it would take years for the market to turn around, so I wanted to track my mentality as I expected the recovery would test my mental mettle as I put money into an account, only to see it fall further and further.  As luck would have it, this decision was made exactly one month before the end of the bear market and it was an abnormally long upward trend since that time.  Of course, that stretch may be nearing an end -- but I will address that later.

The other reason I have been looking forward to this post is that I have now been at my current job for about half of the time that I was employed at Vanguard.  Based on common sense alone, my balance at Vanguard should be twice as large as that at my current employer.  In that regard, it is no surprise that the balance is double.  Based on everything we know compounding interest, it should be no surprise that the balance is in fact more than twice as large as my current balance.  The fact that my balance is more than triple the balance of my active 401(k) balance provides minimal shock.

However, the part that astounds me are the following factors:

• When I doubled my payroll deductions, I went from putting just enough to maximize my employer match to double that percentage (this amount only lasted for two years).
• When I started at my new job, I started at more than 20% higher than my highest income at Vanguard (it is currently 45% now).
• At my new employer, I have been withholding the same amount that I had been withholding, which was still double the employer match.

By all accounts, the amount that I have put into my active 401(k) is considerably higher than the amount of my own money that went into my Vanguard account.  The fact that my Vanguard balance is more than triple than the balance in my active 401(k) supports the power of compound interest.  Even if I divided my present Vanguard balance in half, then that amount is still another 60% higher than my active 401(k) balance.

All these numbers and calculations support the simple belief that "time is money," and between the two, time is far more valuable.  Unfortunately, both are non-renewable resources.  While money can be used to generate more money, time cannot find you more time.  Therefore, time is the most valuable resource we have.  Likewise, everyone is given the same 24 hours in a day.  In that regard, time is the most just resource.

Unfortunately, "timing" the market is not the best route to go.  Perhaps if someone knew exactly what direction the markets were headed at any given time, then it would be a different story.  But because there is no way to know for certainty what today's market will do tomorrow, much less a year or two from now.  But if you were to predict whether the market would be higher or lower in the next decade, the good money bet has always been on higher.  That is the basis behind investing, as well as indexing and all the other concepts that I have discussed for the past decade on this blog myself.