Stupid money mistakes

[Moemg]

Have you ever made a mistake so stupid you wanted to bang your head on the wall ? Well let me go first I bought AIG at $2.12 and four months later sold it at a loss when it went to .46 . It is now at $40.00 . Luckily it was only 500 shares .

 

[Lusitan]

One word: Enron

 

[Rich_by_the_Bay]

Got snockered into an annuity under my first financial advisor; took a hit to get out of it (penalty wise) which was just before the recession. There's 3 mistakes in one: used an advisor, took it out early when keeping it in for a while longer would have immunized it against the crash, avoided the early withdrawal penalty.

I've got lots more, but finally did smarten up a little by going on a voracious reading spree about finance, retirement, etc. in addition to surfing this board.

 

[youbet]

After being booted by MegaCorp, I delayed exercising stock options so that that income would fall into the next year, when I wouldn't be working, and be subject to lower income tax rates. Stock price fell off the table in the next few months. Options went under water and then expired worthless.

I guess I solved that nasty income tax problem! Zero income = zero taxes!

 

[easysurfer]

I seriously thought about buying $10,000 worth of Apple (pre I-Pod, iPhone days) stock when it was about $13 a share but talked myself out of it since I'm not really a stock picker.

 

[FANOFJESUS]

Did you know AIG had a reverse 20 for one stock split? So I think you sold just in time.

 

[friar1610]

One word: Enron

Did that myself. Luckily, at the time I thought I was such a genius for buying Enron (they were starting to deal in brokering bandwidth just as they had for energy and during the dot.com era that looked like a no-brainer) "only" had a free $5K available, so that's all I lost. (Guess we know who the "no-brainer" was.

My other big mistake: Many years ago I got mixed up with the "financial planning" firm USPA-IRA (now First Command). It targeted military folk (which I was at the time.) I bought off on investing in Fidelity Destiny fund on a contractual basis with a heavy front-end load. Fortunately, the fund did reasonably well during the years I held it and I made a heft sum on it. But, due to the front-end load and the high management costs, I would have been far better off with Vanguard S&P 500 Index. The contractual aspect of the fund meant that I was DCA'ing by investing every month, a practice I definitely continued as I became more financially astute and aware of the costs of investing. So I made money and learned some valuable lessons but could have made a lot more if I'd learned those lessons sooner.

 

[Moemg]

Did you know AIG had a reverse 20 for one stock split? So I think you sold just in time.

I thought you were just cheering me up but it is true !
AIG’s Reverse Split Boosts Liquidity … For Shorts - Stocks To Watch Today - Barrons.com

 

[Moemg]

One word: Enron

Did you ever watch the documentary on Enron titled "The smartest guys in the room " ? I thought it was pretty good at explaining the whole Enron mess .

 

[Lusitan]

Did that myself. Luckily, at the time I thought I was such a genius for buying Enron (they were starting to deal in brokering bandwidth just as they had for energy and during the dot.com era that looked like a no-brainer) "only" had a free $5K available, so that's all I lost. (Guess we know who the "no-brainer" was.

Yes, for me it was really an epiphany. I lost pretty much all desire to look for needles, and made peace with my inner investor that I would settle for the haystack.

In retrospect, while I didn't like the loss at the time, I view it now as a cheap lesson; it was a pittance compared to the money it probably saved me many times over the years, and continues to save me.

 

[FIREd]

I bought an annuity inside an IRA... My FA thought it was the best thing I could do with my money and I bought it! Stupid, stupid, stupid... I have not trusted anyone else with my money ever since.

 

[freddyw]

Earlier this year I decided to invest in Northern Telecom stock based on news that senior management was very optimistic with their revised business plan. In addition I foolishly believed that Canada would never allow them to fail. Can't miss right?

So the next day I brought shares at the opening bell feeling that this could be a great LT buy. Later that very afternoon Northern Telecom's CEO announced they were declaring bankruptcy. What a bummer

Just goes to show what greed and poor research can accomplish in tandem.

 

[easysurfer]

Earlier, when I was just starting into investing, and had about 10K in my IRA. With the plan of a financial planner, she set my IRA to this market timing program. Supposely, their proprietary signals would know when to shift the IRA in and out of the market. Luckily, during that short time, the market was during a bull market so I didn't really lose, but talk about sleepless nights. From that point on, I decided no one really would take care of your money as well as yourself.

 

[audreyh1]

A lot of people have bought annuities in their IRAs. When IRAs first came out, FAs would go to companies to "counsel" investors and that's what they would recommend. For some reason our company had an insurance company come in to "sell" people on their IRAs. And that was pretty standard during the early 80s. Fortunately I never invested a whole lot that way.

Only later when the company finally offered a 401K plan did we start to get "real" choices. Most of my pre-tax dollars when in that way.

Remember how expensive investing in the early 80s was? High mutual fund fees, loads, super high fees for trading stock, etc. Things have really changed.

I don't think anyone should beat themselves up about buying an annuity inside an IRA during the early 80s. It was only later that it became obvious as a terrible choice.

Audrey

 

[travelover]

Probably the dumbest thing I did was take money out of my 401(k) as a bridge when I bought my second house. I paid the 10% penalty and taxes. If I'd only realized that I could pay it back within 30 (?) days, it would not have cost me anything. Pre-internet days

 

[RonBoyd]

When I decided to DIY, I used the first $1,000 to split equally between Qwest (Q at ~$9.00) and Frontier Airlines (FRNT at ~$18.00). They are both still in our portfolio, left there as a reminder of my arrogance.

 

[W2R]

Stupid money mistake? Hmmm... one in particular comes to mind. The timeline is as follows.

August 25th, 2005: I skimmed off $8,000 from my bank account and sent it to my mortgage company as an extra payment to the principal, via a check dated September 1, 2005. This left me with just a few hundred more than the regular automatically deducted mortgage payment due on the 1st, but would bring down the amount that I still owed from $24K to $16K. I was making great progress and I was knocking myself out to get it paid off. Oh, and there was a silly little storm in the Atlantic named Katrina that had barely become a hurricane and moved over Florida on this day.

August 27th, 2005: "Mandatory" evacuation for us. Frank and I left at 2:30 AM on August 28th, and I left my car in my driveway and rode in his car. This was my 3rd evacuation that summer I think.

August 29th, 2005: Katrina devastated New Orleans and the Gulf Coast while Frank and I watched from a motel room in Huntsville. Being broke during an extended evacuation due to liquidating my emergency fund, in order to pay off my house, qualifies as a stupid money mistake IMO.

 

[FIREd]

A lot of people have bought annuities in their IRAs. When IRAs first came out, FAs would go to companies to "counsel" investors and that's what they would recommend. For some reason our company had an insurance company come in to "sell" people on their IRAs. And that was pretty standard during the early 80s. Fortunately I never invested a whole lot that way.

Only later when the company finally offered a 401K plan did we start to get "real" choices. Most of my pre-tax dollars when in that way.

Remember how expensive investing in the early 80s was? High mutual fund fees, loads, super high fees for trading stock, etc. Things have really changed.

I don't think anyone should beat themselves up about buying an annuity inside an IRA during the early 80s. It was only later that it became obvious as a terrible choice.

Audrey

I bought it in 2001 unfortunately. Many people were already advising against buying annuities in IRAs, I just didn't do my homework. Even a Suze Orman book would have helped me see the big red flags.

The irony is that I hired a FA so that I wouldn't have to do any financial homework. I came to find out that it just doesn't work that way. Since homework is required whether you do it yourself or hire someone to do it for you, I thought I would cut the middleman and handle my own finances...

 

[audreyh1]

The biggest money mistake I ever made was going back to school to get a masters degree and dropping to part time at my company and thus missing out on a second lucrative stock option grant. My net worth might have been 50% higher today if I had stayed full time. I guess that extra credential was really important to me! Certainly the most expensive degree one could buy.

That bugged me for many years, but now that I look back on it, it doesn't phase me at all. I still managed to ER very young. And who knows, if I hadn't gone back to school I might not have stuck around with the company and had all my options invest - you just never know!

Oh yeah - I also bought a house right before the Texas real estate crash of 1986 and I'm sure I didn't haggle enough over the price either. Babe in the woods! It took over 10 years for that house to get back out from under water. Oh well, I needed to live somewhere anyway, and at least I did ultimately refinance.

The above weren't necessarily stupid money mistakes. But they were big money mistakes!!!

Audrey

 

[Dawg52]

I am a living example of a person that has made tons of stupid money mistakes, but was still able to retire early. Is America great or what?

 

[W2R]

I am a living example of a person that has made tons of stupid money mistakes, but was still able to retire early. Is America great or what?

This is a great country!! It is difficult to think of other countries where we could have had the opportunities that we have had.

I could go on but I will spare you.

 

[ERD50]

Plenty of 'em. Mostly, I look at them as "tuition payments". Like Dawg52 says, I still got to retire!

A stupid (but not huge $-wise), early mistake was buying a whole life policy when I was single. A nice, family member sold it to me. Looking back I just can't believe how naive I was.

But it reminds me that my kids probably don't know any better either, so I try to spell things out to them when I can. Not preachy, but try to make them aware of the pros/cons of choices.

-ERD50

 

[Midpack]

Who hasn't?

For purely sentimental reasons (I owned a 1978 Pearson sailboat at the time), in 1996 I bought into a Cal-Pearson Corporation IPO for $1/share. The new owners were going to revive the company after it's 1991 bankruptcy - in less than 2 years it went to ZERO. They stopped answering the phone, vapor...

Fortunately I only bought 1,000 shares.

What doesn't kill you, makes you stronger...

 

[toofrugalformycat]

Bought a house in Anchorage in 1981 and believed everything the real estate agent said (well, almost) and did not do my own research on future plans for road construction in the area, did not know about underground oil storage tanks, did not get up on the roof (fear of heights), yada, yada.
Was underwater in dollar terms for maybe ten years, garage was literally underwater until I threatened the city to fix the problem they created, and "quiet neighborhood" was suddenly adjacent to a 4-lane road. OTOH I became personally familiar with legislators and city officials and have been an active volunteer in the community to try to make citizens less vulnerable to commercial interests.
Also OTOH I'm probably only down about $40,000 in home value compared to similar houses not in such a noisy location. Not a catastrophe, mostly it just made me realize I wasn't as smart as I thought I was.

 

[Nords]

I seriously thought about buying $10,000 worth of Apple (pre I-Pod, iPhone days) stock when it was about $13 a share but talked myself out of it since I'm not really a stock picker.

I remember then. We bought around $11 in eager anticipation of some new software called OS X. It seemed to be going OK, but it popped up so quickly that we got nervous and sold at $15/share.

Stupidest money mistake? "CANSLIM"...