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What I'm about to say might be controversial. It goes against the grain of the 'Look at me I'm so frugal' meme/arms race here on HN. The financial crash of 08

What I'm about to say might be controversial. It goes against the grain of the 'Look at me I'm so frugal' meme/arms race here on HN. The financial crash of 08/09 left such a bad taste in my mouth (as in I lost many tens of thousands of dollars) that I have completely lost faith in the stock market and anything associated with it such as ETFs, mutual funds, 401k, etc. Getting a 'real' job and putting money into my retirement accounts lost me tens of thousands of dollars in savings (so think about how much lost time that is) and the job that paid for it all. Yes, it absolutely sucked. I was furious, with myself, with others, with my parents (who advised me), etc. It was a terrible time. I drank. I was forced into doing a startup in Dec. of 08. It's been profitable since the first month. You would be surprised at how well you can focus when you lose your job and half of the money in your bank accounts in the course of one business quarter. I now keep large cash savings, put a small amount into my retirement funds, invest the majority of my 'extra' money back into my startup. I bought myself an expensive Porsche, an expensive condo, and started spending WAY more on luxury goods / eating out because losing $XX,000 after being 'responsible' makes you realize how TOTALLY unpredictable this life is, especially when it comes to financial matters. After working about 3x as hard on a day-to-day basis and changing my spending habits to purchasing much more expensive things, I now have way more money than I ever did (in cash and cash equivalents as well as equity in a business). Go figure. This post isn't advice, it's just an honest recollection of the financial transformation I went through in the past 2.5 years.

brk 16y ago
I don't think it's controversial. For one thing, I generally advise people to try to be prepared for future financial catastrophic events (job loss), but also enjoy the fruits of your labor in the short-term. Also, most of history has proven out that the most reliable path to wealth is self-employment/entrepreneurship. However this also has very high risks, so if you're not ready to FULLY commit, your best option might be a 9-to-5 and a slightly less spendy lifestyle.
meterplech 16y ago
This isn't controversial at all. This is pretty much the typical HN answer. But, the OP wasn't looking for this... "I realize the general consensus around here may be that the best investment would be in yourself (have 25k? start a business!), but surely some people have "normal" investments, too. How do you hack it?" Congrats on making this decision to do a startup, but that's not what he is looking for. For what it's worth, I think that the way "big money" wins and "little guy" loses is exactly because of this. When people lose a ton of money, they lose confidence in the market and don't get to make much of it back in the subsequent rebound. To answer the OP's point, I invest in tech stocks/ETFs that I understand. I cut my losses very quickly, but buy more shares on my way up if it's going up. That's how after taking only a 10% loss in the market collapse I grew my portfolio about 80% the past 2 years in the recovery. Good luck! If you want more thoughts/ideas definitely email me- in profile. I'd be happy to discuss.
- tastybites 16y ago
  Oh come on, give me a little credit - here, I'll rewrite the facts of my original post, which you might find adheres to your expected response format (while presenting the same, and no new information information versus the original): I put a small amount into my retirement accounts while spending or investing mostly on my startup business, real estate, sports cars, and keeping cash. Which post was more interesting to read?
  - meterplech 16y ago
    Sorry if it was a bit harsh. You definitely wrote a more entertaining post. I was just pointing out that he was specifically requesting information that wasn't related to doing a startup.
- praptak 16y ago
  If I were to translate the grandparent post into advice for OP it would be "go with deposits".
rabidsnail 16y ago
Your time horizon is too short. If you had left your money where it was instead of taking it out at the first sign of danger then it's likely you would have made it all back by now. There's a lot of volatility in the stock market (that's why the returns are higher than savings, money markets, etc), but the spikes and dips average out if you're thinking in terms of decades and not months. That's not to say that your startup isn't a better investment, though.
- tastybites 16y ago
  > Your time horizon is too short That's not really the point, I think the point is that I shouldn't have been investing in something that could evaporate on paper in 3 months. Either way, yes, the point is I'm a terrible equities/retirement investor and a better small business person. Everyone here has excellent reading comprehension, as I would expect on HN. > That's not to say that your startup isn't a better investment, though. I didn't sell at the first sign of danger (first of all - selling at the first sign of danger would have been a GOOD idea, but my father, the successful older investor, told me to hold on as it crashed.). I sold after the market had come back by around 60-70% from the lows. That was good enough for me, especially since another 'double dip' was a very real possibility in the beginning of 2010. If I had sold at the bottom I would have lost nearly everything. But I finally liquidated after my startup was consistently making money and I actually wanted the cash to put back into the business / spend. Keep in mind I was never broke - I just had a large proportion disappear for a while. That drove me to do 'smarter' things with it after some of it came back. Having said all that, "You should have held on to it" is standard 20/20 hindsight that makes a market crash sound so predictable. I think I had pretty good forward-sight given the situation.
  - drm237 16y ago
    You sold because you were afraid of another "double dip" that didn't happen, and now you think you had "pretty good forward-sight"? "You should have held on to it" is not hindsight, that's typically stock market investment advice. Unless a company's stats have changed to the point where it's now a bad investment, you should hold it and ride out the storm.
stewiecat 16y ago
Retirement savings is the longest-term of all long-term investments. My 401K got torn to pieces during this recession. My first reaction was "How can I buy more?". That's when I started maxing out the 401K and buying additional stock in the form of index funds. Those actions have made my personal recovery from the market plummet much quicker with the upside that I now own stock with a lower dollar-cost-average.
- tastybites 16y ago
  If I didn't lose my job things would have been different - I possibly would have bought more. But remove that cashflow and the options start to dwindle.
  - georgieporgie 16y ago
    Even without a job, I contributed what I could to an IRA. The $1500 I contributed in 2009 was roughly equivalent to $3000 contributed in 2007...

brk 16y ago

I don't think it's controversial. For one thing, I generally advise people to try to be prepared for future financial catastrophic events (job loss), but also enjoy the fruits of your labor in the short-term. Also, most of history has proven out that the most reliable path to wealth is self-employment/entrepreneurship. However this also has very high risks, so if you're not ready to FULLY commit, your best option might be a 9-to-5 and a slightly less spendy lifestyle.

meterplech 16y ago

This isn't controversial at all. This is pretty much the typical HN answer. But, the OP wasn't looking for this... "I realize the general consensus around here may be that the best investment would be in yourself (have 25k? start a business!), but surely some people have "normal" investments, too. How do you hack it?" Congrats on making this decision to do a startup, but that's not what he is looking for. For what it's worth, I think that the way "big money" wins and "little guy" loses is exactly because of this. When people lose a ton of money, they lose confidence in the market and don't get to make much of it back in the subsequent rebound. To answer the OP's point, I invest in tech stocks/ETFs that I understand. I cut my losses very quickly, but buy more shares on my way up if it's going up. That's how after taking only a 10% loss in the market collapse I grew my portfolio about 80% the past 2 years in the recovery. Good luck! If you want more thoughts/ideas definitely email me- in profile. I'd be happy to discuss.

tastybites 16y ago
Oh come on, give me a little credit - here, I'll rewrite the facts of my original post, which you might find adheres to your expected response format (while presenting the same, and no new information information versus the original): I put a small amount into my retirement accounts while spending or investing mostly on my startup business, real estate, sports cars, and keeping cash. Which post was more interesting to read?
- meterplech 16y ago
  Sorry if it was a bit harsh. You definitely wrote a more entertaining post. I was just pointing out that he was specifically requesting information that wasn't related to doing a startup.
praptak 16y ago
If I were to translate the grandparent post into advice for OP it would be "go with deposits".

rabidsnail 16y ago

Your time horizon is too short. If you had left your money where it was instead of taking it out at the first sign of danger then it's likely you would have made it all back by now. There's a lot of volatility in the stock market (that's why the returns are higher than savings, money markets, etc), but the spikes and dips average out if you're thinking in terms of decades and not months. That's not to say that your startup isn't a better investment, though.

tastybites 16y ago
> Your time horizon is too short That's not really the point, I think the point is that I shouldn't have been investing in something that could evaporate on paper in 3 months. Either way, yes, the point is I'm a terrible equities/retirement investor and a better small business person. Everyone here has excellent reading comprehension, as I would expect on HN. > That's not to say that your startup isn't a better investment, though. I didn't sell at the first sign of danger (first of all - selling at the first sign of danger would have been a GOOD idea, but my father, the successful older investor, told me to hold on as it crashed.). I sold after the market had come back by around 60-70% from the lows. That was good enough for me, especially since another 'double dip' was a very real possibility in the beginning of 2010. If I had sold at the bottom I would have lost nearly everything. But I finally liquidated after my startup was consistently making money and I actually wanted the cash to put back into the business / spend. Keep in mind I was never broke - I just had a large proportion disappear for a while. That drove me to do 'smarter' things with it after some of it came back. Having said all that, "You should have held on to it" is standard 20/20 hindsight that makes a market crash sound so predictable. I think I had pretty good forward-sight given the situation.
- drm237 16y ago
  You sold because you were afraid of another "double dip" that didn't happen, and now you think you had "pretty good forward-sight"? "You should have held on to it" is not hindsight, that's typically stock market investment advice. Unless a company's stats have changed to the point where it's now a bad investment, you should hold it and ride out the storm.

stewiecat 16y ago

Retirement savings is the longest-term of all long-term investments. My 401K got torn to pieces during this recession. My first reaction was "How can I buy more?". That's when I started maxing out the 401K and buying additional stock in the form of index funds. Those actions have made my personal recovery from the market plummet much quicker with the upside that I now own stock with a lower dollar-cost-average.

tastybites 16y ago
If I didn't lose my job things would have been different - I possibly would have bought more. But remove that cashflow and the options start to dwindle.
- georgieporgie 16y ago
  Even without a job, I contributed what I could to an IRA. The $1500 I contributed in 2009 was roughly equivalent to $3000 contributed in 2007...