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.
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.
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!
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.
If you pre-pay rent, which is good to have it paid and not worry about, you aren't earning interest with that money which can add up, suppose you get to saving 12-months rent in advance.
You might have to research it further with your bank for GIC and look for online only banks for the HISA option.
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”
Another big one was to invest in real estate without research.
Both were teachable moments this year.
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?
I don't mind giving at all. It's getting fooled part which pinches.
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.
2. Wiping the hard disk that contained 5 BTC from 2008 :)
- Traveling full-time
- Not selling my ETFs (I'm down 20%-30%)
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.
[1] https://awealthofcommonsense.com/2014/02/worlds-worst-market...
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.
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.