Going Broke as a lesson

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heyyou
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Going Broke as a lesson

Post by heyyou » Sun Mar 25, 2007 12:53 pm

To avoid hijacking thread 58291 on the other forum, let's talk about what was learned by losing most or all of your savings. In the early 80's, I lost all of my savings (about two years of gross income) in a leveraged land investment. That was a hard lesson about greed, lack of diversification, leverage, market changes, and my own fallibility when investing. What I didn't learn was what the alternatives were. Those I learned at VG and the DH recommended books. Since then, I've found that I could ramp up my savings enough to still have a good retirement. Losing it all, is a temporary condition that changed my life in a good way. That is the only remark of Robert Kyosaki that I would repeat, something about it being advantageous to go broke early in life.
Five years ago, on paper I had lost a couple of multiples of gross income but knew that I could save it again or the markets would go back up.

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DaleMaley
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Post by DaleMaley » Sun Mar 25, 2007 2:20 pm

Here is another conversation from the old web site on worst investments ever made...

Conversation #56768

Hopefully we all learn from our past mistakes :lol:
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett

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mlebuf
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Location: Paradise Valley, Arizona

Post by mlebuf » Sun Mar 25, 2007 3:22 pm

The best way to learn what works and what doesn't is from other peoples' mistakes. That's what education is all about. The problem with learning from personal experience is that you get the test before the lesson.

I agree that if you're going to go broke, it's much better to do it while you are young. But why go broke when you can learn to do it right the first time?

Best wishes,
Michael

chaz
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Post by chaz » Mon Mar 26, 2007 2:10 pm

It is too bad that everyone does not learn about Vanguard and this forum before making "mistakes".
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

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MOHSHSIHd
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Post by MOHSHSIHd » Mon Mar 26, 2007 5:55 pm

From the thread DaleMaley linked:
12. I bought VTMSX
Sierra Fred| 01-26-07 | 02:22 PM
exactly one day before their year-end distribution in December. The mistake was more ironic than anything else.
What exactly does that mean?

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Abciximab
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Post by Abciximab » Mon Mar 26, 2007 6:42 pm

I don't know if that's ironic, but buying a fund right before a distribution means you're on the hook for whatever it pays out. Now you have to pay taxes on the dividend and/or capital gains. You don't make any money off of it, you just get a larger tax bill.
An investment in knowledge always pays the best interest - Benjamin Franklin

Crowe
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Post by Crowe » Tue Mar 27, 2007 2:18 pm

VTMSX = Tax-Managed Small Cap. He took an unnecessary tax hit while buying a tax-managed fund.

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