Author Topic: What has been more harmful on your journey to financial independence?  (Read 6113 times)

Money Ronin

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Taking too little or too much risk? 

I am risk averse by nature so for me it was taking too little risk.  Examples include buying a smaller house than I could afford in an location where appreciation has been significant or always taking the 30 year fixed rate loan over a 5 year arm.  Just these two decisions alone probably cost me hundreds of thousands.

As I grew older I learned to take more risk financially and it has made a world of difference. That’s what separates me from my peers who are well paid working professionals but likely will never attain FIRE.

Not that FIRE is necessarily their goal but I feel most people (among my peers) are overly risk averse given their financial situation and age.

Sam

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Re: What has been more harmful on your journey to financial independence?
« Reply #1 on: February 05, 2019, 09:19:19 AM »
 I felt I could’ve taken more risk if I was more educated early on. This is why I think it’s good to learn as much about personal finance as possible in high school.

I think in general, most people do not take as much risk as they should or could.
Regards,

Sam

LittleSeedsOfWealth

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Re: What has been more harmful on your journey to financial independence?
« Reply #2 on: February 08, 2019, 04:51:00 PM »
Yup sometimes I wish I'd doubled down on an opportunity. Looking back everything is always clear. But would I have done differently? Maybe not. I know higher risk comes with higher (potential) reward, but if taking higher risk comes with losing my sleep everyday it's probably not worth it.

Most people just don't have that high of a risk tolerance.   

MyFreedomDollar

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Re: What has been more harmful on your journey to financial independence?
« Reply #3 on: February 15, 2019, 12:55:29 PM »
@Money Ronin - I am with you, risk averse by nature... I am sure that holding too much cash has been harmful for my journey to financial independence.  Now that I have been invested for an extended period of time I can recognize the material significance that time in the market provides to an investment portfolio. There is something comfortable about having a nice cash hoard, but it has cost me tens of thousands over my relatively short investing career.  I hate to think about the missed returns over the next 30 years!

Young And The Invested

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Re: What has been more harmful on your journey to financial independence?
« Reply #4 on: April 04, 2019, 08:18:12 AM »
Having only reached 30 this year, I'm not sure I've had enough time to have regrets about my risk exposure.  Truthfully, I've made better decisions as I've gotten older and learned from my mistakes (mostly, I hope).

I'm fairly tolerant of risk, though the 20% pullback in November/December was a doozy that caught my off-guard.  Despite that sudden drop, I didn't make changes during the fall.  Now, however, I'm moving money out of stocks and into much more conservative investments to hold funds for my down payment savings.
https://youngandtheinvested.com/

ForgingFinance

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Re: What has been more harmful on your journey to financial independence?
« Reply #5 on: April 07, 2019, 12:01:31 PM »
I actually took on too much risk in my 20's, losing more than I care to admit thinking I could play hedge fund manager. 

I'm fortunate enough to have had the presence of mind to take a deep dive into my investments around the age of 29. I compared my individual stock investment results with what would have happened had I invested in a total market index fund instead.

The results were ugly and motivated me to get on a better path.

whitetail

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Re: What has been more harmful on your journey to financial independence?
« Reply #6 on: April 07, 2019, 05:30:45 PM »
I took far too little risk early on and I probably overcommitted funds to retirement accounts too early.

I'd like to have more of that after tax and ready for riskier (for me) ventures now.

Money Ronin

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Re: What has been more harmful on your journey to financial independence?
« Reply #7 on: April 08, 2019, 02:02:37 PM »
I actually took on too much risk in my 20's, losing more than I care to admit thinking I could play hedge fund manager. 

I'm fortunate enough to have had the presence of mind to take a deep dive into my investments around the age of 29. I compared my individual stock investment results with what would have happened had I invested in a total market index fund instead.

The results were ugly and motivated me to get on a better path.

I lost half of my 401K buying individual stocks during the dot com bust.  I invested in some Midwest properties in 2010/2011 that were nothing but headaches and money pits.  I graduated during a recession twice in my life.  In hindsight, these were inexpensive lessons because the absolute numbers were small. I've been able to bounce back from these lessons and continue to invest in the stock market and real estate with much more success. 

I'm glad you are on a better path.

My Money Wizard

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Really interesting question! One that I hadn't thought about until now.

Probably too little risk for me. I've wanted to pull the trigger on a rental property for a while now, but each time I get cold feet. Several of those options have seen pretty staggering appreciation after I decided to pass.
Tracking my progress to financial freedom on my blog,
MyMoneyWizard.com.

BrittneyChristy

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Taking health insurance plan after the retirement is the best and good option, as one can do the care of health problem if it is not pocket friendly. Different health insurance plans are available to take like Mutual of Omaha health insurance, Mutual of Omaha Medicare supplement plan G rates, AARP Medicare supplement plan G https://www.thehealthexchangeagency.com/aarp-unitedhealthcare-plan-g, Mutual of Omaha Medicare and more. Each plan has different coverage to the medical expenses.




FinancialNordic.com

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Re: What has been more harmful on your journey to financial independence?
« Reply #10 on: July 11, 2019, 10:00:59 PM »
My biggest mistake has been that I've not lived as frugally as I should have.. It would be so much better for my budget to live together with someone, but I've only done that occasionally. Last month when I started to calculate my expenses, I noticed that I need to cut down my expenses seriously in order to become financially independent!

- NF
Blogging about financial freedom and online entrepreneurship at Financialnordic.com

chrismoneystir

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Re: What has been more harmful on your journey to financial independence?
« Reply #11 on: July 31, 2019, 03:29:18 PM »
Considering we are just getting our finances together in our mid-30's, I guess my biggest mistake at this point is spending more than we made through my 20's.

I think I definitely lean more to the risky side of things, but still trying to figure out where we land. Right now we are struggling with how much to cut from our budget and where to spend extra. We need to make up lost time. The saving grace is that we have a relatively high income, but it still feels like losing 15-years of our adult lives is going to be really hard to make up.

I learned a hard lesson in crypto. Invested $10k when we were trying to pay off debt at the top of the market. Now just holding out hoping we can break even eventually. It was an expensive lesson in understanding how markets work and not getting caught up with FOMO.

Money Ronin

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Re: What has been more harmful on your journey to financial independence?
« Reply #12 on: August 08, 2019, 07:10:21 PM »
Taking too little or too much risk? 

I am risk averse by nature so for me it was taking too little risk.  Examples include buying a smaller house than I could afford in an location where appreciation has been significant or always taking the 30 year fixed rate loan over a 5 year arm.  Just these two decisions alone probably cost me hundreds of thousands.

As I grew older I learned to take more risk financially and it has made a world of difference. That’s what separates me from my peers who are well paid working professionals but likely will never attain FIRE.

Not that FIRE is necessarily their goal but I feel most people (among my peers) are overly risk averse given their financial situation and age.

After reading everyone's answers, I'd like to amend my own as clearly old age has made me forgot some of my investing indiscretions from my younger years (or I had blocked these traumatic memories from my consciousness).  I've always been an avid saver and had a sizable 401K by my late 20s during the dot com boom.  I transferred my 401K to an IRA Brokerage so that I could purchase individual (Internet) stocks because I wanted to get in on the action.  I didn't buy stocks like Amazon but rather startups that no longer exist.  I lost half my portfolio value when things went bust, and there was no coming back just by waiting it out.  Lesson Learned:  Maybe I wasn't such a good stock picker.

By the time the 2008/9 crash occurred, I was no longer picking individual stocks for the most part.  I was in mutual funds/ETFs but still an aggressive portfolio.  My net worth plummeted by half again but I held on; as we all know, the market did recover and so did my portfolio.  Lesson Learned: Maybe don't have all my money in the stock market.

After my portfolio recovered somewhat, I started investing in real estate in 2010.  I started small and cranked it up in 2013.  It's worked out superbly and I've achieved my diversification goals.  Since I'm waiting for the next market crash, I don't have any lessons to share yet.

For those that have taken some risks in their 20s and made some mistakes, don't despair.  Don't let fear paralyze your investing future as has happened to so many of my friends.  As long as you continue to have good income and learn from the past, you will come back even stronger.  In retrospect and in comparison to my current net worth, the 401K that lost half its value in 2000/1 was a cheap lesson.

Jamie

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Re: What has been more harmful on your journey to financial independence?
« Reply #13 on: August 08, 2019, 10:51:38 PM »
fun topic! For me likely taking too little risk. But overall I feel ok with the decisions I made. I could have made more with more aggressive stock picks, but I just didn't have the knowledge or dedication when I was young.