To recap, in 2006 I started an IRA with Schwab. In 2007 I moved my money over to a “high” interest checking account, also with Schwab. It happened to come with a brokerage account which I used to start automatically investing in some large cap and bond market index funds on a biweekly basis. I also set some money aside in a money market fund.

Somehow I managed to time this move exactly at the point when the market was as it highest, in October 2007. Since then, obviously the world economy has been in a precipitous decline. Oh well, this is supposed to be long term right? And it’s not all bad, thanks to dollar-cost averaging. But it’s definitely not great (compared to say, you know, a near-zero-interest savings account).

So what did I do this year? Well in the spring, when it didn’t seem yet that financial apocalypse was upon us, I took some bonus money I’d received and used it to diversify into an international large cap index fund (SWINX). So I adjusted my asset allocation from 70% large cap and 30% bonds to 60% large cap, 20% international, and 20% bonds. I don’t include my money market dollars as part of this breakdown because I don’t add to it on a monthly basis (though I probably should), and because I consider it a fixed value emergency fund.

My thinking was that if the US market was headed further down the toilet (which is where it seemed to be going) maybe the international markets would help balance things out. What I’ve learned over the past several months is that when the US economy is down, it just drags the rest of the world down, thanks to globalization. So as far as my unrealized losses go, I’ve lost the most, percentage-wise, on the money I dropped on international companies.

The other thing that’s happened is that my bond investments have done a much better job of holding their own compared to my equity investments, which has caused the market value of my assets to be more than 5% off of my targets. So just recently I decided it was time to rebalance. This meant for the first time I sold shares, yay, unfortunately I had to do so at a loss, boo. But I used that money to buy shares of my large cap and international index funds on the cheap, which was kind of fun.

The other money thing I did this year was start a Roth 401(k) in September. This is neat because it means that the ceiling on my retirement savings was effectively raised from $5k to 15k. It also means that my IRA is now on ice, just hanging out and weathering the same economic storm as the rest of the world.

Update: Learning how to save, three years later