Wednesday, March 17, 2010

QUANTUM LEAP INVESTING

When I did my taxes this year, I came across something that I hadn't noticed before. I knew the value of my investments had increased dramatically, but given the fact that I was busy looking for work and preoccupied with trying to get by on unemployment, I really didn't give it too much thought. While preparing my taxes I noticed something that made me realize how truly amazing the past year was, when it came to my investments.

When I went through my records and figured my total stock sales for last year, I was amazed to find, the amount I sold, was almost twice the value of my total portfolio at its lowest point last year. What I found even more amazing is, the current value of my investments is 203% greater than the lowest value during the recession and is more than 50% above the highest balance I'd ever held in my accounts. All of this occurred during a year when the country was faced with the worst economic downturn in decades and at a time when I experienced some of the harshest financial setbacks of my entire life.

So I found myself asking how this could have happened, when I knew that I hadn't invested much in additional funds. Of course I know about the changes I made in my investments and I did make small monthly deposits to my IRA. I guess I just never realized at the time, how effective those changes were. It reminded me of something I read in one of my investment books. The author of the book had a theory that people who actively manage their cash flow, and invest in income producing investments, sometimes benefit from sudden quantum leaps in their level of wealth. I'm not sure what his idea of a quantum leap in wealth is, but to my way of thinking, anytime your total investments increase 203% in a little over a year that's quite a jump!

While I think it's doubtful that I'll see such an increase again anytime soon, I do think it's worthwhile for me to go back and take a closer look at what I did during the past year. After all, if there is such a thing as quantum leap investing, then I'd like to know how to repeat the process if at all possible.

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