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Ask HN: What was your worst personal financial mistake?
I'm curious what traps smart people have fallen into that I should avoid, perhaps because you weren't informed or perhaps because you got to confident in some way.
- PaulHoule 8y agoShort selling the S&P 500 in 2005. I saw trouble coming but I missed what the trigger would be entirely.
- mslate 8y agoWhat would you say was the trigger? That was actually my favorite thing about The Big Short—the author did a good job of showing how the traders first to short the market earned the least and experienced the most distress.
- deleted 8y ago[deleted]
- PaulHoule 8y agoMy theory at the time was something I called "The Syndrome" which was based on the idea that the business cycle is based on the balance of "solving problems" vs "creating problems" and thus a homology between the events surrounding 1929, 1968 and 2000. In the "syndrome theory" there is a crisis of the private sector creating problems faster that can solve them that then leads to a change in the governing philosophy that improves matters for a time, but then we run into the limits of that regime and it happens again. This theory called the top in 1999 (I remember watching a football game on Christmas day and the ads were for stocks and bonds and not beer and I went home and sold) In 2005 I thought the 2nd Iraq War would lead to a government crisis (analogous to Vietnam/Watergate) but that didn't happen. Interestingly there was no real "regime change" after 1999 but instead SOX and other regulatory changes seemed to cement a culture of rent seeking and inpunity. Milton Keynes, the great trader, said that "Markets can remain irrational longer than you can remain solvent" and that is quite true.
- ssvss 8y agoLeaving around 20 btc in my silkroad account.
- miguelrochefort 8y ago- Quitting my job - Traveling full-time - Not selling my ETFs (I'm down 20%-30%)
- danroc 8y agoI guess you did (1) in order to be able to (2). How was that a mistake? You did not have savings or a plan? (considering doing the same here...)
- miguelrochefort 8y agoI am frustrated by the state of the world, and I have a urge to fix it. I can't tell if it's a legitimate concern, or if I'm being delusional. The delusion and frustration could be explained by undiagnosed depression and ADHD. I'm traveling to force myself out of the routine I was stuck in for the past few years. I hoped it would allow and motivate me to act upon this urge to change the world. Something else must be missing, as I'm not making the progress I expected. I'm currently trying to figure out what's preventing me from making progress. I'm doing a lot of introspection, meditation, eliminating distractions and time sinks, organizing my values, goals and commitments, using a task manager and calendar, building new healthy habits. I'm trying to fix myself before I can fix the world. My personal finances are currently taking a hit, but I hope it will turn out to be a good investment.
- marketgod 8y agoThe market is fine right now. You should recover your losses fairly soon. Depending on your age, this may be value to read [1]. [1] https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ https://awealthofcommonsense.com/2014/02/worlds-worst-market...
- iamthelord 8y agoBuying Facebook stocks
- happppy 8y agofb isn't going anywhere. Don't worry. Everybody needs fb for data.
- strikelaserclaw 8y agofb is a long term hold. I'm sure they'll do ok.
- notomorrow 8y agoStaying in academia
- quietthrow 8y agoNot starting retirement savings till I was 41 Ps I just started this year. Would like to see how I can understand what I have lost so far and what would I need to do to “make up”
- sergiotapia 8y agohttps://www.daveramsey.com/smartvestor/investment-calculator https://www.daveramsey.com/smartvestor/investment-calculator
- tudelo 8y agoI would recommend playing around with https://www.firecalc.com/ https://www.firecalc.com/ as it seems to be a pretty customizable calculator.
- knopkop_ 8y agoIt may be different where you live, in the UK it's often suggested that when you start out with a pension you should save minimum half your age as a percentage of your income until you retire. I.e. if you start at 41 then you should put 20.5% into your pension.
- farseer 8y agoBuying a lot of domain names, unfortunately selling them is a lot harder than expected.
- csa 8y agoMy worst financial decision was to choose to be an academic as my “first” career. The pay wasn’t terrible in my case, but it wasn’t anywhere near my potential. The other side of that coin, however, is that it was probably one of my best life decisions — I am a much better and happier person because of it. Answering a slightly different question: I can definitely say that I know several people for whom getting married and later divorced was extremely expensive for them on many levels. I imagine that some folks will be reluctant to state that for themselves in a public forum, but it definitely happens. It can be a very tricky topic in terms of what constitutes a reasonable division of assets.
- sergiotapia 8y agoNot starting to invest sooner. I should have started at 18 but I didn't know. What I would give to have those extra years of time in the market.
- atmosx 8y agoWithout time to build not afraid to lose capital?
- drakonka 8y agoI am making mine right now - I spend too much money and save too little. I'm working on it, but it's proving difficult to get out of the habit. When I was a freelancer saving was easy because I didn't have the illusion of a consistent paycheck. But now I'm in a full time, stable job in a country where employee rights are good and job security is high, and I'm not prioritizing saving as much as I know I should. This is something I'll be working hard to improve.
- marketgod 8y agoThe best way to do this, IMO, is to have automatic withdrawals from your account into another account.
- sloaken 8y agoYou are correct! It is a fully time tested method that can work for anyone.
- drakonka 8y agoI do have automatic withdrawals, but unfortunately I often end up taking some of that back into my main account. I also have 10% being kept from me each month by my employer as part of the Employee Stock Purchase Plan - it is my one bit of savings that I literally cannot touch until the shares are actually purchased. The next purchase period is in February and my plan is to immediately pay off my thankfully fairly minor debt and then learn not to touch the rest.
- sloaken 8y agoIf you are able to move it back easily, then you did not move it far enough away. Have the auto withdraws go somewhere harder to access. A mutual fund or something. Or a bank with a saving account where you need to GO to the bank to get the money back out.
- throwaway413 8y agoRight there with you. One trick I've been using as of lately is pre-paying my rent by paying for 2 months each month. That way the money isn't available for me to spend uselessly. I'm still spending it, but on a bill that I'd hav to pay anyways. I'm up to 3 months of pre-paid rent and feels good to know that if something happened to my job, at least I won't lose my apartment.
- fractalwrench 8y agoTaking 3 years to move from my first job, as I was underpaid and didn't realise how much until getting an offer.
- thiago_fm 8y agoNone, I'm quite savvy with money since very young. But I surely did lost a lot of opportunities.
- cimmanom 8y agoWaiting until 2008 to invest savings dating back to 2003.
- keiferski 8y agoNot changing my fundamental mindset about money. 99% of the time, it's better to focus on the long-term goal of increasing your income, rather than saving a small amount of your current income. Extreme frugality is almost always a waste of time and earning potential. For example: 15% of $150,000 is more than 40% of $50,000. This is also why living in a HCOL but making proportionally more money is financially smart. If you can only save 10% of your income, that 10% number will be far higher if your total salary is higher.
- z303 8y agoI second this. Spent so many years turning down jobs in London. Took the plunge about six years ago. earning over double what I did before but more importantly got so many more opportunities and levelled up my game
- Anurag8701 8y agoInvesting in under-construction properties in developing countries which never got completed due to builder fraud and losing a large amount of money :(
- deleted 8y ago[deleted]
- FatDrunknStupid 8y agoRent a house with someone before buying with them. I've given away two fully furnished houses - put me back 15-20 years I reckon.
- PruneTracy 8y agoNegotiating against myself, and accepting the negotiating "frame" of the bidder when I had a monopoly/monopsony asset. I sold a four-letter common-noun .com domain to a major corporation back in the '90s when they were scooping up domains, and fell for the "name your price" trick: I asked around and named a number I thought was high and they said "that's acceptable" – I'll never know how much they might have paid if I'd tried to find another bidder and made a market. Did I learn my lesson? A few years ago I sold a long-term residential lease to a private-equity developer after bidding them up to "enough to buy an equivalent apartment" – but really the value of the lease to them may have been much higher. I negotiated as if I were selling them my apartment, rather than pointing out that what I really held was their ability to freely develop a very valuable property into which they'd already sunk $40 or $50 million. I can't really complain, both "mistakes" were only failures to maximize windfalls. And I'm not embarrassed – they were professional negotiators and I'm just a lucky programmer. But I do sometimes regret not being greedier!
- Spooky23 8y ago1. Shooting too low and not taking enough early career risk. 2. Wiping the hard disk that contained 5 BTC from 2008 :)
- pfdietz 8y agoNot cashing out some options as soon as they vested at a large corporation that then went into decline.
- drieddust 8y agoMy Worst mistake was to give too much of my personal gains to close family out of sense of duty only to realize very late that they were simply playing me to accumulate wealth for themselves and whomsoever they considered dear. Another big one was to invest in real estate without research. Both were teachable moments this year.
- BigFish12 8y ago"only to realize very late that they were simply playing me to accumulate wealth for themselves and whomsoever they considered dear." As someone starting out a pretty successful career with a not so wealthy background, I also feel that I will soon need to give of my personal gains to my close family out of a sense of personal duty. Which doesn't really bother me, as I am very grateful for what they have done for me and they would have probably done the same for me if the roles were reversed. My question is why do you feel that they played you? They asked for too much? They asked too often? They were not grateful? You were expecting things that they did not do for you? Could you please elaborate more on this?
- drieddust 8y agoYes they asked for too much and demand increased as my income levels grew so watch out for this behaviour. I would say decide what you want to share and keep the boundaries clear. I don't mind giving at all. It's getting fooled part which pinches.
- jon-wood 8y agoDismissing Bitcoin as vapour in the very early days (back when you could feasibly mine on a CPU). I still think it’s nonsense, but it’s nonsense that’s made the people around me who bought into it very comfortable!
- muzani 8y agoInvesting about $5k into starting a cafe. Low risk businesses are actually surprisingly high risk in that the margins are really poor, sometimes even negative once you count inflation. Also heavily underestimated inflation of developing countries - if it has high growth, it probably has high inflation. In SE Asia, prices will double every 15 years, if not faster. If you know tech, invest in tech, because your odds are likely above average.
- miguelrochefort 8y agoToo frugal with money, too wasteful with time.