your largest financial mistake to date?

[socca]

My mother inherited interest in a partnership from her second husband. A couple of years ago, she made a $230k mistake with respect to this partnership. She can afford it, but nevertheless feels badly about her mistake.

I've been fortunate in my own financial affairs. The two major mistakes I made with regard to finances were when I was just starting out as an investor (30 years ago), so I didn't have much to lose. Each of these mistakes cost me about 15% of my then-tiny net worth:
(1) making an investment based on a prediction of the direction of a change in interest rates; and
(2) following the advice of a Merrill Lynch broker regarding investing in a closed-end fund new stock issue. Only later did I discover the broker had a conflict of interest, being compensated by the fund for peddling its shares.

Has anyone made a financial mistake comparable to or exceeding my mother's (I hope not ... )?

 

[mystang52]

Nowhere close to 230K, but it sure was a helluva lot of money to me: I had some $70,000 worth of AIG stock (cost basis of 30,000). It was just part of my overall savings and retirement planning. Didn't give it a thought....and wasn't following the news.
I heard something on the car radio about AIG being in some sort of financial trouble, and that the stock had plummeted. I made a mental note to check it out when I got home, and then forgot to do so. But it wasn't a total loss; I ultimately sold the stock for about $1200

 

[gcgang]

Biggest mistakes: investing with "friends".

Did a Jewish deli and a premium (sporting) event packager. Lost all invested on both.

 

[highlow65]

having children

 

[Closet_Gamer]

Had vested stock options that were deep in the money at an employer who was being bought. Deal was supposed to close at $85/share. During arbitrage phase it made it to $81...but I held on for "full value"...things went sideways and deal finally closed at $68.

I don't remember the exact amount but the damage was well over $200k.

Ugh. Oh well. Live and learn.

 

[RunningBum]

Being poorly diversified and taking a beating in the dot.com bubble burst.


My best financial move? Being heavily invested in tech stocks during the dot.com run-up.


Overall I came out ahead, but I still feel like I got greedy and should have diversified once I had "won the game".

 

[calmloki]

Lent money to a group of professionals complete with suits and downtown suites. After a year the group evaporated, taking with it our money - about what we spend in a year. Also sold pretty much all our stocks and held on looking for another slide just before one of the best years for the market ever. Awful glad the renters subsidize my mistakes.

 

[scrabbler1]

I invested in some bond funds which didn't do very well. One of them seemed to defy the inverse relationship between its NAV and monthly dividend return - both declined together! I can't say I lost money while in it for a few years, but simply breaking even compared to putting the money under a mattress was a bad outcome.


Back in the late 1980s, I also invested $2,500 with a group of friends from college in some tax liens on delinquent properties in western New Jersey. The idea was to find one or more which could be resold to real estate developers eager to build expensive houses on them. But this foreclosure process was long and it was tough to find local lawyers to do it. I asked my friend, who I had barely remained in touch with, for a buyout. In 2003, he gave me $5,000 which came out to an average annual return of 4.4%. Not bad but not great considering the risk I took. That $2,500 would have been useful when I bought my apartment and had little money for a while.

 

[rodi]

Hiring the wrong contractor to build our granny flat. Even after collecting on bonds for general and sub, and collecting some reparations before GC gave up paying, we still spent about $150k more than we should have.

2nd mistake was less $$ overall - but it was when I had no money - so the impact was greater.... Accepting credit card offers when I was in college and had not money... then USING them.... Got in over my head and it that debt took a while to pay off. No one to blame but myself... that's for sure.

 

[RobbieB]

Selling the townhouse (in Huntington Beach, CA) for what I bought it for instead of renting it and cashing out for three eighths of a mega-buck.

 

[Moemg]

Selling at the almost bottom in 2009 . Luckily it was only $20,000.

 

[pb4uski]

Employer offered the Evergreen Core Bond Fund in their 401k.... I invested in it starting in 2004. Everything went well until I looked at it in 2008 and it was down much more than other bond funds.... after looking into it I figured out that the geniuses at Evergreen decided to make a bet on certain types of bonds and the bet had failed spectacularly. Over the period that I held it (2004 to 2009) I lost $32k. If I had had access to something like Vanguard Total Bond I would have had a gain.

 

[GrayHare]

Not taking out a larger mortgage prior to RE.

 

[Car-Guy]

In the past 20 years, I've made a number of "~100k" mistakes or misjudgements in several financial areas. Before that I made some smaller mistakes but didn't have enough money on the line to really matter. (although it seemed like it at the time) Fortunately, most of my "investments" have more than made up for my mistakes many times over.

My best financial action was to invest the max I could in my companies 401k for 25+ years and invested it wisely (as it turned out).

 

[ejman]

Not buying Berkshire Hathaway stock at $130/share when I first learned about it back in 1978 or so. I was very tempted but it would have been a stretch for me to buy a round lot ($13,000 was a lot of money for me back then although I had saved enough - I could have done it) and did not want to pay the extra commission to buy odd lots.

 

[steveark]

$60,000 mistake!

My biggest salary year I decided to put off executing some stock appreciation rights, worth then $60,000. I was in the max tax bracket but was retiring next year so it was a no brainer I thought to wait three weeks to execute the stock options when I'd be in a lower tax bracket. But in that three weeks our awesomely managed corporation's stock tanked and my stock rights became worthless. On the plus side I made a lot of money from those guys and it was a good lesson on the old "bird in a hand versus two in the bush" or pigs get fat, hogs get slaughtered! Amen.

 

[6miths]

Most costly 'mistakes' have probably been not buying a larger house, not moving to Vancouver 15 years ago and buying into an overpriced market, and 60k loss on RIM back in the days when I had actual stocks. I don't really think of any of these as real mistakes, just the way things go.

 

[COcheesehead]

Ever having spent a single dime in a casino. Money evaporates in those places.

 

[exnavynuke]

Blowing bonus money on fun without saving/investing any of it in my 20's.

 

[frayne]

Cashing in a 401K for a down payment on a house many years ago back in the 80s. Cost me about $10k at the time plus additional income taxes.

Fortunately, I got back into the 401K, maxed out my contributions and didn't touch again until which time I rolled it over to an IRA upon retirement.

 

[2017ish]

Unfortunately, we beat OP's mom. I'll exclude the poor choice on the political jurisdiction in which DW started to practice out of residency (which ended up costing us 200K in tail payments down the road). But, buying and improving our "last house" there ended up costing us about 300K when we finally had to pull up stakes and start over again. Granted, we weren't looking at the house as an "investment," which of course was a big part of the problem!

 

[harley]

We also (probably) beat the OP's mom. This wasn't an investment, but it was definitely our biggest financial mistake (so far), although it hasn't actually happened yet. We built our beach dream house in 2007, and moved in in Jan. of 2008. We've loved living there, but the cost was ~$1.5M, and our area took a massive hit during the housing collapse and has never recovered. If we were to sell right now I'd be surprised if we could get more than $1M for the house. There were so many houses in our neighborhood/area that went into foreclosure that all of the prices got severely depressed, and comps are still very low. My neighbor just sold a house a year older than ours for about 70% of what they built for.

As I stated in the thread on being near the grandkids, we've been seriously considering moving closer, both for family and better access to medical care (it sucks out here). If we do we'll lock in the loss. If we decide not to and stay here for 10 more years it will probably be moot. But DW has a terribly hard time with the thought of taking the loss. I'm more, eh, it is what it is. It won't break us, but it certainly was bad timing.

On the other hand, we bought three rentals and our FL home cheap in 2009 - 2012 for a total of less than $1M. If we were to sell those houses the combined gains would be just about the half million we'll probably lose on the Beach house. So que sera ,sera.

 

[euro]

Nowhere close to 230K, but it sure was a helluva lot of money to me: I had some $70,000 worth of AIG stock (cost basis of 30,000). It was just part of my overall savings and retirement planning. Didn't give it a thought....and wasn't following the news.
I heard something on the car radio about AIG being in some sort of financial trouble, and that the stock had plummeted. I made a mental note to check it out when I got home, and then forgot to do so. But it wasn't a total loss; I ultimately sold the stock for about $1200

I did the same with Worldcom - in fact, I doubled down on the way to zero by buying an additional few hundred shares..... overall loss wasn't that big (high 4 digits), but I didn't even get a good dinner out of the final proceeds - it truly went to zero.

 

[Midpack]

I bought into an IPO for sentimental reasons, a boat builder who had gone into bankruptcy in 1991, bought by new investors in 1996 who floated an IPO. They went completely bust by 1998, without any warning whatsoever, and I lost the entire investment - every penny. Fortunately it was only $10K. I knew it was hope against hope when I invested, and I've never invested on sentimental reasons before or since.

 

[CaliKid]

No horrible choices of investment but wasting money as a young adult on cars, car stereos, and other frivolous things. That money would have grown nicely had it been invested instead. Oh well....