How to Lose A Million Dollars And Live To See Another Day

The following is a guest post by insightful reader JayCeezy. He is a veteran investor who shares his perspective on investing, retirement, and risk tolerance. If you want to learn how to lose a million dollars and live to see another day, read on!

How To Lose A Million Dollars

Multiply by 667 to get to $1 million and then light on fire.

Kidding. It was a lot more. Fortunately, I’m over it and have moved on. Hardly ever think about it. No, sir.

I love the subject of Personal Finance, and enjoy books, podcasts, newsletters, and especially Yakezie network blogs. There is a future-based element of fantasy to the subject, reaching the financial independence to allow us to say and do what we want, instead of what we have to.

And now and then, I need a break from PF blogs where everybody is smart, a critical thinker, successful, resilient, goal-oriented, a winning investor, and great-looking.

You, dear reader, are all of those things, or you wouldn’t be reading Financial Samurai. So, let’s change it up for a few minutes; sit back and vicariously experience a few stories about how someone (ok, me) metaphorically burned the roof of my mouth on a hot slice of PF pizza. Make sure you keep a cold mug of Schadenfreude nearby.

Black Bloody Monday, 1987

If you want to learn how to lose a million dollars, we must turn to Black Monday in 1987.

Wow. That was a day. At the time, I considered myself well on my way to becoming a seasoned investor who could take a punch; but was revealed as a dilettante with a glass jaw. After a 40% runup for the year, on October 19,1987 the Dow fell 22%. I distinctly recall hitting a ‘happy hour’ after work, and overhearing two guys who appeared to be finance pros commiserating. “A lot of people are going to make a lot of money off of today.

Yeah. Bartenders,” I thought to myself.

Over the course of the next two brutal months, I lost the equivalent of four months’ salary; it was inconceivable to my callow mind. I lost my nerve, and sold my fledgling mutual fund that had seemed like such a smart investment a few years earlier.

Punchline: Oh, and the Dow finished positive for the year.

Lesson: Don’t panic after something bad happens. The bad thing already happened. It is too late to panic. Go to a ‘happy hour’, and smile through the tears. Accept that once you think you are a seasoned investor, you are at least five years away from being seasoned.

(picture: Kevin Bacon in ‘Animal House’, 1978)

Buying An Annuity With My IRA Rollover

After leaving a job with my 401(k), and attempting to avoid paying taxes and penalties for early withdrawal, I was referred to a financial professional. I expressed concern for both safety and tax avoidance, and she suggested an IRA rollover.

It all sounded great as I signed, and I wondered if maybe I was taking advantage of her helpfulness. I asked her how she would make any money off this, since I did not see a commission line item. She replied, “Don’t worry about that, the company takes good care of us.” Imagine my relief! Nice lady, she didn’t want me to worry.

I said ‘OK,’ because it sounded great with all these tertiary benefits like Life Insurance and a guarantee of return of principal. But those of you still reading along know what came next. It was a ‘shark attack,' in which my IRA rollover was expensed 1.45% annually for unnecessary “annuity tax protection.”

IRAs are already tax protected. There was an early withdrawal penalty if I moved the money in the first eight years. And a 12b-1 ‘marketing fee’ of 0.5% per year, unnecessary because the marketing had been complete when I signed the contract. All this on top of a .95% annual administration expense. But that was fine print I didn’t read until years later when the stock market went up but my IRA rollover didn’t.

The Punchline

I calculated she made over $6,000 from my investment, spending 30 minutes with me. $12,000 an hour, nice work if you can get it!

• Lesson: Don’t consider Life Insurance an ‘investment’, and don’t keep an IRA in an Annuity. Guaranteed ‘Return of Principal’ is a perceived benefit one will pay dearly for, with little practical value. And most embarrassing of all, Note To Self: read the fine print before signing anything.

Note from Sam: I encourage everyone to see how they can reduce their 401(k) fees as they add up tremendously over time. I went from paying $1,700 a year to now less than $500 a year on a ~$400,000 401K. 

Employer Misappropriated My 401(k) Funds

I had built up the equivalent of eight months’ salary in the 401(k) in five years, as the first employee in a small business. The company owner and I crossed paths at a client site I had been working at for four years; he didn’t recognize me, and I had to reintroduce myself to him. He then acted like he owed me money, to use a figure of speech. Little did I know, it was literal and not figurative behavior. He had made personally made over $250,000 off my work by that time. Wow.

I had been receiving annual 401(k) plan summaries. But it turns out they had been falsified. I know, right? I contacted law enforcement. They directed me to the Department of Labor to obtain documented evidence. I contacted DOL. They would not get involved for disputes less than $100,000. Catch-22. I alerted my fellow employees to the situation, and we agreed to team up to get our money back from this fictional 401(k) plan.

The employer then paid them all their money but not mine, solving their problems and isolating me from them. Back to fighting alone. I hired a lawyer; something I never in my wildest dreams thought I would have to do. I thought if I lived my life right, I wouldn’t have any problem like this that couldn’t be reasoned or discussed. My employer knew he was wrong and owed me money and had lied; he just didn’t want to pay. I settled when the cost of going to trial was revealed to be twice the amount in question, with no guarantee of results or subsequent collection.

The Punchline

I paid the lawyer 40 cents of every dollar, which wasn’t the full balance owed.

• Lesson: Nobody is looking out for you. Not your employer, not the government, not the legal system. Don’t worry about insulting someone with a simple request for information about your own money. Sometimes trust will be broken and the issue will not be what is right, but what the other party can get away with.

Friends Who Ask To Borrow Money

If you want to really learn how to lose a million dollars, lend your friends money!

Four were friends, none are today. Two of the four paid me back. 25% of the money was paid back. Not huge amounts, but certainly not small. Funny thing is, none of these guys were best friends. I rationalized that they didn’t ask close family or closer friends, because they didn’t want to be embarrassed. I liked all these guys, wanted to help them out with no other agenda, and still miss their friendship to this day.

“Asking” is different from “offering” to help a friend or family member. Sometimes money is the only solution to a problem, and it is nice to be able to help others when you can. Much different feel than when you are the ‘mark’ they come to with the request.

Related: Never Ask To Borrow Money From Friends Or Family

• Punchline: Not until years later, did I find out that in all cases they used the loans from me to pay others to which they owed money.

• Lesson: Once someone asks to borrow money, they have decided the friendship is already over. If you say ‘no’, you will no longer be friends. If you say ‘yes’, you will keep the appearance of friendship for longer, but in reality you are no longer friends.

Home Sales – A Great Way To Lose A Million Dollars

Let’s do this quick, like removing a band-aid. First home, I built up an equity in 15 years, paying off the home. Nice neighborhood, but something odd happened. In two homes on my street, grandparents who had been in the houses for decades had adult children move back in and bring their teenagers with them. The teens started selling drugs out of the homes. You can guess the rest.

We then moved to an idyllic small town I had fallen in love with as a teenager. It is home to the largest tennis tournament in the U.S. as far as participation is concerned, and my wife and I had been visiting it together for 15 years, wondering “Why do these people get to live here, but we don’t?” So, we ‘just did it’ and bought a home there at the top of the real estate bubble.

Long story short, we had some difficulty with malicious neighbors, and double-standards for HOA (un)enforcement. We woke up every day with a pit in our stomachs, and didn’t see any hope for improvement. Seven years later, we sold at a net loss of…wait for it…the entire equity amount of my first house. Coincidence? Doesn’t matter! It is a drag to have zero real estate equity after 22 years of home payments.

See: What If You Buy A Home At The Top Of The Real Estate Market Cycle

• Punchline: Sometimes falling in love as a teenager is just really infatuation. Actually, every time.

• Lesson: It is totally worth it to get out of a home/investment at a loss, if you would not buy that same home/investment today at the price you can sell at. And do not let your teenage grandchildren move in with you.


At a certain point, a man puts away childish things.

I had some cool ones. Some had been given to me in a generous family spirit. Others had been acquired through countless hours of trading, buying, and selling. Some had been momentary impulse acquisitions. And some had been fortuitous pedestrian items that the market only years later determined to have nominal value. But they were a lot of fun, and not everything is measured in dollars.

I decided to divest. Part of my ‘downsizing’ and ‘simplification’. One bronze age comic book, that was never what one might call a contemporary success, was ‘X-Men’. I bought a copy of Giant-Size X-Men #1, read it once and put it in plastic, and stashed it in a box for 32 years. It cost me 50 cents, and I sold it for $500. Five years later, the guy I sold it to had it graded and sold it on eBay for $5,200.

Punchline: In 1998 I had an offer of $600 for a pristine copy of a Howard Stern PPV; I thought I could do better, and it would go up in value forever. Today they go for less than $10.

Lesson: Sometimes you are going to leave money on the table. Not everything is measured in dollars. You don’t know you are in a bubble until it is too late. And something is only worth what a buyer is willing to pay.

Stock Market downturns: 2000-03 (-50%), 2007-09 (-57%)

My 5 Year Portfolio
5 Year Portfolio History

Here's one of the best ways to lose a million dollars. OK, I hope you get ready. Because this is the big one. After five years of 20%+ returns in the late 1990s, I was actually kind of relieved to see a bear market for the next three years.

I had been sitting next to guys telling me about these ‘great stocks,’ yet they had never heard of a P/E ratio or could name three stocks in the Dow 30. A contrarian sign, no doubt. The S&P 500 P/E was over 32. It all seemed normal. The dot-com bubble burst, and 9/11 destroyed lives along with hope for a post-Cold War lasting peacetime and confidence in a predictable future. A lot of time and effort and tears and pain went by. Oh, and the markets cratered, too.

But eight years later, employment was at 4.4% (I know, right?), and the future appeared somewhat hopeful. I had taken the first downturn as a buying opportunity going all-in, and on schedule to join my wife in an early retirement in 2008. How could something like a 50% Bear Market happen again, so soon?

Well, in October 2007, the S&P 500 (75% of the entire US stock market) declined 57% over the next 16 months. Imagine looking at your life’s work of saving and investing, and seeing 43 cents for ever $1 you had just 16 months prior (I know, right?)

A Loyal Wife

The most horrific day of this slow downward grind was the worst one-day decline since Black Monday two decades prior, and my portfolio shrank by the cost of a Rolls-Royce Ghost. For those of you eager to crap on my point, allow me to assist by saying that, yes, the Ghost is the entry-level Rolls. I know, alright? But still, I’m just saying.

Well, my wife is the greatest; she understood the potential consequences for us immediately, and went back to work to help us rebuild our savings (at her employer’s request, a win-win if there is anything positive out of this). That had to have been every retiree’s nightmare, to be out and pulled back in, but she did it without complaint.

I had been planning an early retirement since age 16, when I looked around at people working most of their lives at jobs they were ambivalent about, and decided that I had to find an out. It was a pretty shameful thing, to go over our portfolio and see such devastation without any active decisions on my part; I just turned on the computer each day, to watch it crumble further.

How could this massive wealth destruction happen twice within 10 years? Fortunately, my wife was cool about it, very supportive; she didn’t blame me and said she would have made the same choices with the same available information. I took an example from her, put on my ‘big boy pants’ and kept going to work and saving. It was all I could do.

The Hits Keep Coming

Two vicious bear markets, leaving the S&P 500 nominally lower in 2013 than it was in 2000, a dividend-reinvested return for the 13 year-period of just 1.9%, and forward-looking GDP growth at less than 2%. Ugh. For those who have not yet inferred the point I have implied above, the future is unknowable. It is good to plan. Past Bear Markets have lasted 19 years; can you endure another six years of sideways stock movement? If not, what might you do in the alternative?

When you are young and have some successes, life seems short. But then…it just keeps going. And maybe those early successes run into some headwinds. It is at that point, one (ok, me) realizes that life is long, and will be a lot longer for those with plans that crater under real-time stress testing. My attempts to control my reaction to the emotions of Greed and Fear had only led me to regret.

• Punchline: I spent thousands of unproductive hours in worry, anger, sleeplessness, feeling hopeless, and facing my failure in the form of hard numbers. I will never get that time and energy back. But I did my best at what I could control, and the world did not end.

• Lesson: Regret comes like a Monday dawn in winter; cold, wet, slow, grey, and the promise that the day will get worse. Everybody is a risk taker when the rewards come fast and easy, but the downside of failed risk is Regret. Once experienced, it makes one (ok, me) reconsider appetite for the possible consequences.

At this point in my life, I will do just about anything to avoid that emotion of Regret. Markets can stay irrational a lot longer than you can stay solvent. Lastly, if the opportunity presents itself, get yourself a spouse who will have your back. By far my best investment, but that is a subject for another post.

You Won't Know Your Risk Tolerance Until You Feel The Pain

Well, these are a representative sample of my PF blunders and buffoonery. Admit it, you kind of feel better about yourself now, right? Yes, I knew it; good. That is why I shared them. And also admit it; after reading the headline, weren’t you kind of relieved I didn’t rework the Steve Martin joke that makes it into every PF blog post about ‘a million dollars’? Yes, I knew it; good.

If we are lucky enough to play this PF game for awhile, we are all bound to incur losses. The Kübler-Ross model for Grief has five stages which go like this: Denial, Anger, Bargaining, Depression, Acceptance. I like to revisit those old neighborhoods now and then, but currently live in the “Acceptance” zip code.

The losses are behind me now, but the lessons and humbling are still with me. Fortunately, I’m over it and have moved on. Hardly ever think about it. No, sir. And if you have learned nothing else from this post, please learn this: to make an umlaut over the “u”, type ‘Alt + 129’

And if you, dear reader, have any PF blunders you would like to share, as along as there is a lesson to learn I would like to hear them, too. Good luck to us all!

Editor's note: The impetus of this post came from a discussion JC and I had on the “Recommended Net Worth Allocation By Age And Work Experience” post. Many readers argued that they were fine with having a majority of net worth in stocks. We wanted to provide the other side of the story. 

Also check out: Are You A Real Millionaire? $3 Million Is The New $1 Million

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About the Author:

Sam began investing his own money ever since he opened an online brokerage account online in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at Goldman Sachs and Credit Suisse Group. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered.

In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $350,000 a year in passive income largely thanks to his new investments in real estate crowdfunding. He spends time playing tennis, hanging out with family, consulting for leading fintech companies, and writing online to help others achieve financial freedom.

48 thoughts on “How to Lose A Million Dollars And Live To See Another Day”

  1. Jay, thanks for the article, we don’t see nearly enough like this which give real details of the booby traps that are waiting! I’m a little confused by the story of the big market drops in 2001 and 2008, are you saying that you sold when the market was low, or bought when it was at the top, or both? It is sobering to see that long period of time between when the market was at it’s pre 9/11 peak and when it returned to that level. I made a big mistake back in 2000, invested 100K in a couple of high tech companies that I believed in, but which went out of business. Should have believed in Apple, not VA Linux!

    Anyway, I am a huge believer now in a portfolio of low load index funds (I basically own the ones chosen by the Schwab “Intelligent Portfolios” tool), but I’ve got everything in the stock market because I just don’t know enough about any other areas of investment, and I have ten or fifteen years to let the oscillations average out before I need funds for retirement. So that’s basically my entire investment strategy for now. I got screwed by not diversifying in 2001 (index funds were less well known at the time, and I was young and didn’t comprehend risk), but I don’t feel comfortable diversifying outside of index funds now..

  2. Great post Jay!

    I have been fortunate enough to learn some of these lessons as well. Bought a bunch of single family homes as rentals right before the 2008 real estate debacle and lost them all. My wife and I are just now back to an even net worth (at age 40 no less…ugh).

    How did you get past being gun-shy on future investing? At this point, I know I have to be a little more aggressive, but with limited income ($100k between us) and time, I also know there is a premium on not losing money again. I am really at a loss for which direction to start this leg of my retirement planning and am always looking for insight.

    1. @Kevin
      Thanks for the shout, Kevin. Sorry to hear about your lesson, hard-learned. Please don’t feel like the Lone Ranger, that was a devastating period and it isn’t over yet!

      “The sun shines, people forget.” – Pete Townshend Amazing, nothing fundamental has changed, nobody has gone to prison, the news stories seem to focus on losers who put 0% down and “lost their house” even though they had no skin in the game, yet the world seems to have wiped this from memory. But investors like you cannot forget. Brutal lesson.

      To answer your question, I am not “past being gun-shy”. This is still very much with me, every day. I am not sure the answer is to be “more aggressive”, because that implies “more risk” which has bigger consequences as you age through the system. It might not feel like it, but 40 is young and you and your wife have many years left (hopefully) to work and invest. There are no bargains out in the world, as far as I can see. But it is always a good time to work, save, and build up some ‘dry powder’ to invest when an opportunity does present itself.

      We live in an odd time in history, where people feel they “have to do something!” when sometimes the best course of action is to do nothing, or continue on without a dramatic change. You don’t have to do anything, until you feel good about it. We also live in a weird time, where people play Black Ops and Zombie Survival, and then get to start from scratch for the next game. The game is never over in PF. You may have heard of Ginsberg’s Game Theorem: “You can’t win, you can’t break even, you can’t quit the game.” Only the truth is funny.

      For myself, I am protecting my nut “like Sparta!” and cannot take another loss. My financial future is not bright, but not dim; I’m foregoing any great parlays in order to avoid loss (and especially regret). My setback cost me and my wife many additional years of working and saving. But that is the best choice of available choices.

      For you, I wish you continued success. The fact that you and your wife are putting on your ‘big boy pants’ and are back to even is huge. The fact that you are interested and taking responsibility for your future will guarantee that you will do better than the 90% of the masses who don’t deal with it and treat time with the same value at age 52 as they did at 32. Looking forward to hearing your progress!

  3. Jay,

    Fantastic life lessons! Hope you taught them to someone younger in your family.

    I am a bit confused on the contradictory nature of a few of them though. Specifically, how could you say “return of capital” isn’t worth it in an annuity when you have 2 other lessons where you lost 20+%. How nice would it have been if you got your money back!

    1. @Evan, in the Annuity I was paying for tax protection I did not need as the money was already in an IRA Rollover from a 401(k). In addition, “return of principal” guarantee would be the accurate phrase I should have used. The holding period was 8 years, and the investment choices were back-end loaded bond and equity funds. There were some additional restrictions, but the odds of them doing anything but making money off my investment through the loads, fees, expenses and administrative costs, and the principal being lower at the end of the “return of principal” duration, was ridiculously low.

      I did realize a positive nominal return, but paid quite dearly for my ignorance. I bought a product I did not fully understand, did not understand the costs for this insurance product (I paid for insurance, not an investment), and paid thousands in unnecessary money that would have gone back into my IRA Rollover to work for me (not the Annuity company).

      My father, a high school teacher, and a work colleague all were excellent PF mentors to me and I am really grateful for the time they spent walking me through the minefields of PF; all mistakes are my own:-). I have not yet found a mentee interested in my thoughts, but am open to sharing if a younger family member ever shows an interest. Continued success to you, Evan.

      1. Start a blog or write more for Sam! You’ll find hundreds of bad mentees and then like 5 or 10 fantastic ones.

  4. Jose, good to hear you turned and walked into the fire in ’87. Those like you that had the fortitude to do so did great! You reminded me of a great quote from a cool western, “No brag…just fact!” – Will Sonnett

    And you are right about the right way to lose a million dollars! The last story Stock Market downturns: 2000-03 (-50%), 2007-09 (-57%) is that, but bump your numbers up a little!*ouch!* Well, I guess that is why the truth is funny. I rubbed some dirt on it and walked it off!:-) Hope 2013 is good to your portfolio!

  5. This is not a brag, but I made money in the 87 correction, which in comparison to later years was a minor roadbump. It was pure beginners luck and going against the advise of my broker. But don’t fret, 2002 more than made up for any gains I made in 87. I watched over 100k in an IRA turn into 20k in an IRA, and like an idiot I ride the roller coaster all the way to the bottom. By the way, I thought the right way to lose a million dollars was to start with two million and invest in the stock market? :)

  6. Jersey John, my deepest sympathies extend to you. I am sorry for your loss.*bows head, signs cross, looks up in questioning anguish* Sometimes it really does feel like God hates us all.:-)

    Seriously, you just dropped that 1,500% on my toe and it hurt my jealous bone. Which is connected to my envy bone. So, congratulations on a shrewd longterm move! You are in the game, and have my full respect for that alone. Can’t tell you the number of people in and out of my life over the years, who spend $1.02 for every dollar they make and just…keep…waiting…for…theirshiptocomein! And it never does, because they are not in the game. Hope to read some of your successes on the FS board, next time you feel like it. Thanks for the shout.

  7. Jersey John

    Great article.

    I’m still bitter about losing 30ish% of my net worth over the past few months due to AAPL’s fall from grace. The kicker is that I’m still up 1,500%, but damn, at $705 it seemed like it was invincible, and $1,000/share shouldn’t be a problem.

    Coulda, woulda, shoulda.

  8. That’s just sad about money and friendship. It’s true that when the issue of money or a loan comes between friends, the friendship is always affected. Even if they get to pay you the loan, the friendship will never be the same again.

    1. College Investor, it is sad. One of the ‘freedoms’ financial independence can give us, is not to be in the position to have to “ask” for a loan from family or friends. It does change everything, forever. There is something just too odd when somebody in your life cannot get their act together enough to get a credit card, or save a few thousand dollars, or otherwise ‘carry their own financial water’.

      People who manage their lives on the margins often wind up creating or leveraging problems in the wrong direction, having a negative impact on those close to them. For instance, I don’t understand how a 35 year-old man can have money for drinking, dating, sports betting, and a nice car, yet somehow ends the year owing $10,000 in taxes. And asks a friend for a loan. He has decided that he will not ask his parents, siblings, g/f, take a cash advance on a credit card (“I refuse to pay 18% interest!”), etc. Yes, it is sad. The only thing I can control, is that I will never be one of the “askers.”

  9. Failure stories are the best! When I read or hear somebody with a “success story”, my first instinct is…”just wait, the story isn’t over like you think it is!”:-)

    Seriously, failure stories bring two quotations to mind…

    “Tragedy plus time, equals Comedy.” – Steve Allen

    “Tragedy plus ‘not you’, equals Comedy.” – Steve Marmel

  10. Keeping good thoughts for you Jane, the pain will recede but the lesson will not. “It gets easier.”

    1. Thanks Marvin, appreciate your kind words, and salute your service. I enjoy your writing and wish you continued success.

  11. “Don’t panic after something bad happens. The bad thing already happened. It is too late to panic. Go to a ‘happy hour’, and smile through the tears. Accept that once you think you are a seasoned investor, you are at least five years away from being seasoned.” Very sage advice and I could not agree more. Those that do panic are the ones that will generally continue to lose money in the future and not learn from their mistakes. I know the pain of losing like that absolutely sucks, but I think the experience of that can really test the mettle of an investor and see investing in the long term as opposed to the near term.

  12. JayCeezy, your loss makes me feel a bit better about mine. My biggest financial blunder was buying my first house at the top of the market. Five years later I sold it at a substantial loss, around 40k. It still stings when I think about it. Looking back, I probably should have rented since I was young and single. Fortunately, I’ve recovered with the help of my wife (dual incomes) and living below our means. I drive a 10 year old car. Thanks for sharing your story.

    1. Michael, glad I could help you feel better!:-) Sounds like you are on a great path, with a great spouse. You can tell a lot about a person, in the way they describe their spouse. Glad you are both on the same page with finances, that is huge. The car thing you are doing is great; the average age of the car on the road today in the U.S. is 19 years. They make them so much better than they used to. That is a great way to keep costs down and cashflow in the right direction, thanks for sharing it.

  13. The First Million is the Hardest

    Excellent post. Always good to get a dose of reality from someone who’s experienced the many ups and downs that many of us younger investors only speak of in the hypothetical sense. We’re all going to have “blunders” how we learn from them is what will determine our success in this game.

  14. I have to say that ran a little long. It’s also past midnight so my attention span is even shorter than usual. What was your stock allocation? If you’re planning to both retire, shouldn’t you have 50% in bonds or something like that? Our allocation is a bit heavy in stock at the moment and I’m moving some over to bonds next week. We still have 25 years left before we withdraw from our retirement fund though so we can still handle a couple more bear markets.

    1. LOL~! Joe, the answers to your questions are in the post. Thanks for your useful critique, I will keep it in mind next time I lose a million!:-)

  15. My first job, I put all my 401k in company stock (Worldcom). Left the company before it went to $0, but still lost at least 50%. Then transferred to a new company and rolled 1/2 of what remained in my 401k into company stock, never learning my lesson. 2nd company went chapter 11 (sigh). It’s good learning these lessons early though… oh the cost of education.

  16. JC, I actually did the “unthinkable” one time. Lent one of my brothers $5,000, even though my wife and I needed that for our house purchase.
    Well, to make a long story short, he did pay it back when he said he would. :-)

    PF blunders abound in my own life as well, including being under the impression that there’s ever a good reason to borrow money from a creditor, other than for a house or for education.

    One of the things I’ve learned over the years is to press ALT + 162 to make the cents symbol. :-)

    The other more important thing that I’ve truly learned is that it doesn’t matter what you earn, it’s a matter of how much of what you earn that you actually keep.

    1. ¢

      LOL! I did not know that was available, thanks! I was about to congratulate your brother for having the personal character not to screw you over, but on reflection I think it is you and your wife that are to be congratulated and your brother is lucky to have a sibling like you!

  17. MFIJ, thanks for sharing those. I had a great time putting together my post, and gained a very practical appreciation for what the Financial Samurai and bloggers like yourself are accomplishing by generating content (and with it, clicks and eyeballs). I could never do what you all do. Also, your approach to ‘regret’ is very healthy. Continued success to you.

  18. A cheap education, Jeremy, and there will be more tuition due in years to come. Life Insurance is a great deal if you die right away. If that sounds like a perverse incentive to your beneficiaries, and a great deal for the Insurance salesman, then you are right to cut and run now.

    A combination of my lessons above was recently told to me by my father. He lent a ‘friend’ a sum of money many decades ago. This ‘friend’ squandered much more than money in his life, if you know what I mean and I think you do. The ‘friend’ recently sent my father a signed-over LIfe Insurance policy he had been paying on for 42 years(!), with a note saying that my father could continue the payments and collect on the life insurance when the ‘friend’ died. Imagine that. 42 years of premiums, and the only person left in that ‘friend’s’ life was an old army buddy he had betrayed and curbed. My dad just tossed it, literally and figuratively. My father has been a real mentor to me over my life.

  19. If you are not making mistakes, you aren’t doing anything! I invested in income property because I had more control over my investments. Although I invest in the stock market, I try to keeep an asset allocation that is not as sensitive to the normal volatility.

    1. Krantcents, if I have done my math right, you bought your first home and investment properties right in the sweet-spot of the ’70s. That was an amazing time, with 18% mortgages and 20% annual appreciation (and 13% inflation). As a hard example of your returns, my parents just sold their home of 44 years; the selling price was 2,732% higher than their purchase price. Congratulations to finding that winning horse, and keeping it racing.

      1. I bought my first house in 1973. Thanks to a hefty down payment, I picked up the existing mortgage (5,25%) when the prevailing rate was roughly 7%. It was a fixer and I got a 25% discount. It doubled in value in 3.5 years. Ye,s it was really crazy times, but it was in 1979, I think. I should have stocked up on treasuries when they were 18%! Can you imagine getting 18% for 30 years?

  20. Aside from just not investing adequately and spending most of my life like a consumer, my biggest financial blunder was buying a house at the top of the market. As a military family, we moved every few years and I had watched for years my friends enrich themselves with every move, always selling for a profit, buying new homes that were much nicer with those profits, and doing this time and again. All the while we rented. We finally decided to buy, at exactly the wrong time.

    Now, I rent that house for a loss, I’m still 60,000 upside down, and I pay the mortgage plus an additional $1000 monthly principal payment trying to get back ahead.

    Great lessons here!

    1. Mike, I salute your service and thank you and your family for what you are doing for all of us.

      My own thought is a bit different from most on this board; I do not see a primary residence as an investment, although some (including host Finanical Samurai) have turned some very tidy profits by doing so. Renting can be a very smart choice, when you need to stay flexible for potential moves and are able to bank the difference between monthly rent and the overall cost of ownership. At this time, paying the additional principal payments is a guaranteed return (the interest writeoff and imputed return at your mortgage rate are a wash) and you will be out from under in five years. It will go by quick. You may be being a little hard on yourself for not enjoying the real estate cycles your friends lucked into (but probably congratulate themselves for).

  21. Gosh sorry to hear about your 401k situation with your previous fraudulent employer. Man that must have been so frustrating that your colleagues were able to get all of their money. It makes me mad that lawyers have to be so darn expensive too that people who really need the help have to drop cases because the fees get too high.

    I admire your positive attitude through all of your PF hurdles and for learning from your mistakes. We all run into rough patches, and learning from them is the best thing we can do to avoid future repeats. Thanks for sharing!

    1. Thanks, Sydney, with some years of hindsight I can now appreciate my former employer’s move as a brilliant strategy. At the time…not so much. And at the time, my co-workers got what they were entitled to, and it was smart for them to take their money instead of spend money on a cause that was no longer applicable to them. Anyway, it was just a real eye opener for me on the way the world really works.

      I enjoy your blog as well. Keep up the great work and insightful posts!

  22. helpful post. Unfortunately it has been v. hard for me to come across more realistic advice in general – keep it coming!

    1. Thanks for the kind words and encouragement, Greg. I think realistic advice might be a little rarer, because “(m)ost people try to make what they love into the truth. Instead, embrace what is true and learn to love it.” – Robert J. Ringer

      One of the things that has drawn me to the Financial Samurai blog, is Sam’s ability to see things the way they really are instead of how he wants them to be. I try my best to do the same.

  23. Looks like it’s important to diversify a lot-don’t solely depend upon the stock market to always do well. Managing money well is the key here-and taking care of those that are in your life.

    1. Mike, I took what I thought was a reasonable risk, and paid the price for my gamble. Side note, I plugged my PF info into four commercial Retirement Calculators (all with Monte Carlo simulations) as well as my own custom model. Not one of them predicted the ‘Black Swan’ event that destroyed trillions in wealth all over the world. You got the lesson of diversification in two sentences above, that took me 30 years to learn.

  24. Thank you. People always see the success stories, but never hear about the thousands of failures before. I have learned, success is, when you faile 100 times and still do not give up. So i am impressed with your story, knowing everybody could be on the same shoe.

    Never forget to take good care of your spouse, although there is a lot of volatility in emotions too ;-)

    What i dont understand is how you can get so many losses from the down markets. Did you sell all your stocks in the lows? at least there should be a nice dividend income, i guess.

    1. Rico, that is a great point about my spouse and I can never be reminded too much. She is the only one who didn’t try to change me. All the others wanted me to buy them horses, Range Rovers, become a tango and swing dancing champion, or go off to work in order to pay for their dreams coming true like some sort of ‘human wallet’. I could go on about my romantic failures, but that is for another post.:-) I like your thought and definition of success, and will keep it in mind next time I start to obsess on the battlefield of my life, strewn with the scores of smoking boots of my failures.

  25. If you lend money to friends, and never see your friends again, it was money well spent… thank you for sharing your stories, I have lost a ton of money as well but like you bounced back quite easily. The market bumps are easier to stomach than friends’ betrayals though.

    1. Thanks for the kind words, Pauline, it might seem like I bounced back easily because I left out all the time I spent sobbing, wiping away tears and snot, and drinking myself to sleep. That was strictly an editorial choice on my part for narrative’s sake, with the readers in mind.:-)

  26. Tim Huntley

    Sage advice about loans to friends. I suppose some of the advice applies to loans to family members as well, but mostly we can’t get rid of our family :) – In those cases I tend to look at the money as a gift vs. a loan. I certainly feel better about it.

    re: Collectibles – Amen. I was into Baseball cards as a kid and rediscovered my interest in the late 80’s and early 90’s. I remember people paying CRAZY money for Billy Ripken error cards (he was holding a bat and you could see FU inscribed into the base) and collectible Desert Storm cards. I held on to a few things with sentimental value, but sold everything else.

    All the best,


    1. Thanks, Tim. The Billy Ripken card story is new to me, so I looked it up here. Hilarious, am I wrong to laugh? If laughing is wrong, I don’t wanna be right! I had some fun cards, including this one, this one, and this one. Also admire your recognizing the sentimental valuables, I sometimes get confused and distinguishing ‘price’ and ‘value’.:-)

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