Finance Life

My Financial Wins and Losses of 2017

My Financial Wins and Losses of 2017

This past week, as I read other bloggers’ year in review posts, I realized that I hadn’t reflected much on the past year. 2017 was actually a big year for me financially, mainly because I took an active role in managing my own finances, expanded my personal finance knowledge, and of course, started this blog. In taking control of my finances, I made quite a few improvements, but I also made several mistakes. Here are my financial wins and losses from the past year.

Financial Wins

I increased my salary by 25%

At the end of 2016, I realized that my growth in my job was slowing and opportunities at my company were limited. Fortunately, in the Bay Area, there are a lot of job opportunities for software engineers. So, I decided to find a new job. After rounds of phone screens, technical screens, and onsite interviews, I received a job offer from my current company. The team and company seemed to have what I was looking for: mentorship, structured processes, and opportunities for advancement. On top of that, the offered base salary was 15% more than my current salary. But I knew that I could negotiate for more.

I asked for a 13% increase in the base salary, which was a bit higher than the number I had decided I’d be happy with. This allowed for some wiggle room, in case they couldn’t meet my request. They counter offered with a salary I was pleased with and a $5000 signing bonus. So, I gladly accepted and consequently increased my salary by 25%.

I started investing my money

Right after I left my job, I knew that keeping my old 401k would cost me hidden fees. So, I decided to roll it over into an IRA. I had done this before when I had quit my first job to go to my programming bootcamp two years ago. Back then, I chose a Roth IRA, hoping the fact that I’d be unemployed for part of the year would lower my taxes. However, once I had rolled the money over, I thought that was all I needed to do and never looked at it again.

So, when I started doing research to decide where to rollover my 401k this time, I finally looked at the Roth IRA that I had opened two years ago. Luckily, part of my money had been invested in my first company’s stock… and it had doubled! But the majority of my money was in cash, just sitting there and collecting dust. After seeing how much money can grow by investing it, I knew that I couldn’t just leave my money sitting around, doing nothing for me. I wanted my money to make money for me. This realization sparked me to invest the rest of the money in my IRA and all of my savings, except for my emergency fund. And thanks to the amazing returns of the market in 2017, my money has grown by at least 20%.

I put my emergency fund into a high yield savings account

After realizing that I needed to start investing, I moved nearly all of my savings into a brokerage account. I kept the rest, my emergency fund (about 6 months worth of living expenses), in my bank’s savings account, which had a measly interest rate of 0.01%. Even though I had heard about bank accounts with much higher interest rates, such as Ally Bank (1.25%) and CIT Bank (1.55%), it felt like too much of a hassle to open another account and move my money.

But after reading this post from Millennial Money Diaries and seeing how easy it actually was (plus, they were offering a $100 bonus), I decided to stop being lazy and finally make some money off of my emergency fund. So, I opened a high yield savings account with CIT Bank and transferred over the money. And after nearly three months, my emergency fund has made $61 in interest!

Financial Losses

I didn’t max out my 401k

As I mentioned in my last post, I didn’t max out my 401k last year. Even though I was financially able to max it out, I thought it’d be better to contribute a bit more than the company match and keep the rest for short-term savings. But since I wasn’t investing that money, I was missing out on the benefits of compounding. When I finally understood the advantages of maxing out my 401k, it was already halfway through the year. In order to make up for lost time, I significantly increased my contributions and by the end of the year, I had contributed $12k to my 401k.

I contributed to a Roth 401k*

My current company offers employees the choice between a Traditional 401k and a Roth 401k. Since I never had the option of a Roth 401k before, I decided to try it out. When you contribute to a Roth 401k, you’re contributing post-tax money, which means that you’re only putting in money after taxes have been taken out of your salary. It’s usually recommended that people in a low tax bracket or who are early in their careers choose a Roth 401k.

Even though I’m early in my career, I’m actually in a fairly high tax bracket (thanks to being in a lucrative industry). On top of that, I work in a state that has a high income tax rate. Once I had realized just how much of my paycheck goes to taxes, I started re-thinking my choice. As stated in this article from The Financial Buff, by choosing a Roth 401k, I was probably overpaying in taxes, forfeiting the opportunity to reduce my taxable income, and giving up the option for a Roth conversion in the future. After six months of contributing to a Roth 401k, I switched over to a Traditional 401k.

*It’s debatable whether or not this is a financial loss; it mostly depends on what my tax bracket is when I retire. There are definitely advantages to contributing to a Roth 401k, such as tax-free growth and the ability to withdraw money (only what you contributed) penalty and tax free before you’re 59 1/2 years old. 

I bought high and sold low

When I started investing, I didn’t really know what I was doing. I tried reading articles on different stocks but they always felt contradictory. One article would say to buy a certain stock and the next would advise against buying it, saying that it was going to drop. As a result, I felt super confused about both what to buy and when to buy.

Buying high

After watching a certain stock skyrocket on an amazing run for more than a month, I started to experience a bout of FOMO (fear of missing out). I worried that I was going to miss out on the incredible returns, so I bought it right at its peak. Of course, the next week, the stock dropped like a hot potato. My FOMO got the best of me. 🤦

Selling low

When the market was up, I was ecstatic from seeing my investments go up. However, when my stocks dropped, I got scared. Like most people, I worried that they would keep going down and I would lose my money. So, I decided to sell some of my shares… only to regret my decision the next day or week when the prices went back up. 🤦

After going through these experiences of buying high and selling low, I’ve realized that the “buy and hold” approach is much more suitable for me… and my stress level.

What were your financial wins and losses of 2017? What financial lessons did you learn?

My Financial Wins and Losses of 2017

16 thoughts on “My Financial Wins and Losses of 2017”

  1. Wow a 25% increase in salary- that’s amazing. Congrats on all your achievements in 2017!

    I know the feeling about buying high and selling low- I don’t bother with that now and just dollar cost average. Works better for my sanity! 😉

    1. Thanks GYM!! I’m fortunate to be in an industry that pays well and to have skills that are in such high demand right now. 😀

      Glad I’m not the only one who’s done it! Yes, dollar cost averaging is much better for one’s sanity and stress level!

    1. Thanks Zach!! It definitely helped me out with catching up for my 401k and increasing my savings rate. Thanks and good luck to you too! Can’t wait to see how your net worth grows this year! 😀

  2. Congratulations on getting started in the coding world! Hopefully I am not far behind you:) JavaScript is kicking my butt though…

    I definitely feel you on the buy high sell low moment. Back when I played around with individual stocks when I first got started in investing, I bet (notice how I said bet and not invest;)) on Fit-Bit. I struck BIG for me at the time by gaining almost $700 after holding it for 1 week! Little did I know that that was the high and I then lost all those gains and an extra $1,000…That was my wake up call to research more about the stock market!

    Now I make my investing easy for my families portfolio. I simply own the entire market at the cheapest price possible. I put all the $$$ that is in my Roth IRA and my fiancée’s Roth IRA into the Vanguard Total Stock Market Index Fund. I know it’s boring, and I will probably spread that out in 5-10 years (or maybe not;)) but I already know the math behind our investments. By simply owning the market and letting it compound over 35-40 years, our retirement accounts will be worth millions.

    Thanks for sharing and keep up the GREAT work!!!

    1. Hi Sean, thanks! This actually is my second software engineering job. I was fortunate to get such a pay raise in just switching jobs! Sounds like you’ll be joining me pretty soon! I’m sure you’ll get the hang of javascript soon enough!

      Oh wow, that’s awesome that you were able to get such big gains in one week! But unfortunate that you ended up losing them and then some… It sounds like you have a solid plan by investing your money into low-cost index funds. 👍 It may be boring, but that approach has definitely been proven to work!

      Thanks for stopping by and for the support!! Same to you!

  3. I think it’s about time to look into a high-yield savings-account myself. I’ve been with my current bank since I was 18 because they were the ones I could walk to from my house. *Shrug*. Maybe it’s time to increase my standards, a bit! I’ve never heard of CIT Bank before. Time to do some research.

    1. Hi Sylvia,

      Thanks for stopping by! Yes, I highly recommend looking into a high yield savings account!! I’m also still with the bank I had since high school, but only keep a small amount of savings there now. It took nearly 10 years to switch to another bank, so I totally understand how you feel!

      I had never heard of CIT Bank before either until I read Millennial Money Diaries’ post about them. I’ve had a good experience with them so far and their interest rate is the highest I’ve seen so far! Ally Bank is another good option for a high yield savings account. I think I’ve seen several personal finance bloggers use them. Good luck with your research!

  4. Hey Cyn!

    What a great way to collect thoughts on your wins and losses for the year.

    I’m happy that you found a new opportunity and with a $5000 signing bonus. That’s one mistake I’ve made in the past — I didn’t know what a signing bonus was when I used to search for new opportunities!

    As for FOMO, my fiancé and I’ve done that lol… it’s better to do DCA or hold single stocks that you believe in for the very long term (I.e forever!!)

    Btw, each time I read about Roth IRAs and stuff like that, I get confused because I’m in Canada but it doesn’t hurt to gain some insight about them 😁.

    Well, I am wishing you the best for 2018!! Let’s make the best out of it by learning our past mistakes!

    1. Hi Ms. Panda!

      Thanks! This was the first time I ever got a signing bonus! I didn’t even think to negotiate the salary for my first job, so I totally understand how you feel!

      Yes, it’s so easy to fall into that trap of FOMO with stocks. I totally agree! DCA and “buy and hold” are keeping me from giant heart attacks each time the market drops. 😛

      To be honest, I’m still confused about Roth IRAs! Every time I think I understand them, someone tells me a fact that I didn’t know! Hopefully your retirement accounts in Canada are less confusing than ours in the US!

      Thank you so much! I hope you have a wonderful and prosperous 2018 as well!! 😀

  5. I put our emergency fund into a high yield savings account(American Express @ 1.35%) a few months ago. It was a great decision for us since it was only getting 0.5% at our previous bank. We might even open another high yield savings account at CIT since their rates are a bit higher than American Express.
    25% salary increase!! That’s a huge bump, congrats on that!

    1. Hi Kris! Oh wow, I didn’t realize American Express offered a high yield savings account! Opening another account with CIT sounds like a great idea, especially since they recently raised their rates to 1.55%!

      Thank you! 😀

  6. What a huge year for you! A 25% raise is something to celebrate.
    I wouldn’t consider not maxing out your 401(k) a big loss; you contributed a ton of money, put funds into both a traditional and Roth fund, and started investing – all great financial achievements.
    I feel you on the individual stock frustrations, though. I did that for a little while via Robinhood, but absolutely hated it (and lost money). I, too, am a buy and hold person. I now rely on robo-advisors for my investments because I know I get easily flustered by the stock market. I know a ton of other bloggers would loathe using a robo-advisor, but there are only so many things a person can stay on top of at a time!

    1. Hi Jane! Thanks!!

      You’re totally right. Sometimes I get tunnel vision after reading so many personal finance blogs. 😛

      It seems like we all go through that when we first start investing. Oh cool. I’ve heard a lot about robo-advisors and have thought about trying one out, but I think I’m a little too much of a control freak when it comes to my investments. Of course, with that comes the stress and responsibility of managing them. 😛

      Glad to hear that it’s been working out for you and it sounds like it keeps your life less stressful! 😀

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