Feel Like a Fool and It's My Own Fault ...

[SoReadyToRetire]

Sigh. A few months ago I was flying high and getting excited about the prospect of FIRE-ing. (I'm 60 and was looking seriously at 62 to retire.)

Fast forward to end of 2018 and I lost nearly $40K out of my pocket because I was chasing profits in a company started by someone I knew well. Stock was at $288/share and projected to go to $400. Yeah, right. It's around $145 today. OUCH.

And on top of that, my DH and I *both* invested our 401k's in pretty high-risk funds that did great while things were great, but ... well, you know the rest.

So now we've lost nearly a year of gains in our 401k's AND all that liquid cash. (I know it's not "lost" until I sell my stock, and I'm holding on optimistically--am only down $33K now).

Anybody else in here been as foolish as us and had to postpone FIRE?

 

[rodi]

This is why there is so much discussion here of risk tolerance and asset allocation.

You bet I've made some risky/bad investments.... and it always worked out badly for me. So I switched to index funds because I learned that I am a *terrible* stock picker. And it's why I temper the gains/losses of the equity market with a chunk in bonds and fixed income.

Fortunately, I discovered my bad stock picking ability before I was ready to retire... Didn't have to delay my retirement.

 

[aja8888]

Sigh. A few months ago I was flying high and getting excited about the prospect of FIRE-ing. (I'm 60 and was looking seriously at 62 to retire.)

Fast forward to end of 2018 and I lost nearly $40K out of my pocket because I was chasing profits in a company started by someone I knew well. Stock was at $288/share and projected to go to $400. Yeah, right. It's around $145 today. OUCH.

And on top of that, my DH and I *both* invested our 401k's in pretty high-risk funds that did great while things were great, but ... well, you know the rest.

So now we've lost nearly a year of gains in our 401k's AND all that liquid cash. (I know it's not "lost" until I sell my stock, and I'm holding on optimistically--am only down $33K now).

Anybody else in here been as foolish as us and had to postpone FIRE?

I've actually had a stock tip from a BIL in Ca go from $12 (bought by me) to $0.05/share. Try to sell shares at a nickel!! Embarrassing call to Schwab to have the shares "removed" so I didn't have to look at them in my account.

We have all made similar bad choices as you over the years. I'm over 70 now and have set my asset allocation to 25% equities (total stock market fund) and the rest fixed income of CD's, T Bills, a muni bond fund, and money market funds. Screw the market, I can't make it back again.

 

[Lsbcal]

We've all made mistakes or we wouldn't be on this forum. Who needs a forum when you are a billionaire?

And some of those mistakes were smaller amounts but way back in time when they could have grown to monster proportions by now.

So just learn from your mistakes and do the obvious i.e. set an AA you can live and prosper with, recognize you are going to have cash burns in retirement so can't afford a huge portfolio hit, etc.

 

[sengsational]

Bail on the $145. You'll thank SGOTI for saving your FIRE.

 

[njhowie]

Fast forward to end of 2018 and I lost nearly $40K out of my pocket because I was chasing profits in a company started by someone I knew well. Stock was at $288/share and projected to go to $400. Yeah, right. It's around $145 today. OUCH.

Sounds like NVDA.

 

[ckelly78z]

It's hard not to stay aggressive when you see the potential gains. I don't play with startups, or penny stocks, but am probably more aggressive in my 401K than I should be, but still up 8% this month.

 

[pb4uski]

That is the beauty of investing in broad based index funds that give you what the market gives.... when they underperform you have loads of company and when they do well you can all party together.

 

[COcheesehead]

The loss of a years’s worth of gains is stopping the train to retirement? I wonder if you were overly optimistic in your plans to begin with. How were you planning on dealing with sequence of returns risk, because something similar to what you describe could easily happen in the first few years of your retirement.

 

[Sunset]

I've actually had a stock tip from a BIL in Ca go from $12 (bought by me) to $0.05/share. Try to sell shares at a nickel!! Embarrassing call to Schwab to have the shares "removed" so I didn't have to look at them in my account.

We have all made similar bad choices as you over the years. I'm over 70 now and have set my asset allocation to 25% equities (total stock market fund) and the rest fixed income of CD's, T Bills, a muni bond fund, and money market funds. Screw the market, I can't make it back again.

Could we be related ?
My cousin who made $4 MM on a stock told me of a "HOT" deal , being a little wiser at that time I didn't bet the farm.
I put $1,000 into it, and now it's worth $000000000.00
I have not asked that it be removed, as I want the reminder for the next hot tip that comes my way.

 

[ejman]

Retired for 16 years now. There have been periods, such as the 2008 debacle when unrealized portfolio loses (even with a 50/50 portfolio) exceeded my projected expenses for well over half a decade. I think that if the portfolio balance is such that even one year losses would delay retirement then it might be a good idea to actually delay such.

 

[bigcmagor]

Retired for 16 years now. There have been periods, such as the 2008 debacle when unrealized portfolio loses (even with a 50/50 portfolio) exceeded my projected expenses for well over half a decade. I think that if the portfolio balance is such that even one year losses would delay retirement then it might be a good idea to actually delay such.

My folks dropped 25 years worth of expenses in the financial crisis. They said they never worried since they had 20 years of expenses in cd's. Of course, they made it all back plus some because they didn't sell.

I didn't have that much intestinal fortitude.

 

[NW-Bound]

My folks dropped 25 years worth of expenses in the financial crisis...

Ah, someone who has a very low WR. If they were doing 4% WR, lemme see what the loss of 25 x 4% would leave them with...

 

[COcheesehead]

Ah, someone who has a very low WR. If they were doing 4% WR, lemme see what the loss of 25 x 4% would leave them with...

I didn’t take it that way. I look at expenses as being necessities. To me that is different than desired income which includes non essentials, travel, charity giving, etc., things that you have some flexibility with, rather than food, power, taxes, clothes, etc.

 

[treeofpain]

20 years in CDs?

 

[Sunset]

20 years in CDs?

In the old days, CD's paid a lot of interest.

I wish I had the money and smarts to buy them when they were paying ~15% - lock that in for a few decades

Instead I borrowed $$$ for a mortgage from family and paid the discounted rate of only ~14% instead of the bank rate of ~17%

 

[bigcmagor]

20 years in CDs?

Their first bond purchase ended up a bankruptcy, so no more bonds. At the worst of the crisis, they were driving to banks within 50 miles chasing the best cd rates.

Mom was a stock picker and dad a non-believer. Once mom turned her coupon savings into $1mm, dad got on board. They never had a WR, choosing to live off dividends and interest - whatever they were.

 

[marko]

They never had a WR, choosing to live off dividends and interest - whatever they were.

Not to be nit-picky, but if you are withdrawing 10% of a portfolio via dividends and interest, that is your WR.

It might be irrelevant to your parents at this point, but some people think that you can spend as much of your interest and dividends as you want and not consider it a withdrawal as long as you don't touch the principal.

 

[Dawg52]

Remember the rage for LDDS? Later known as WorldCom? I know lots of people who lost money on it. It happens. Average person should stay in funds.

 

[marko]

You bet I've made some risky/bad investments.... and it always worked out badly for me. So I switched to index funds because I learned that I am a *terrible* stock picker.

My stock picking record is 100%! Usually within a few weeks of buying a stock it tanks, never to return.

I guess my instincts are sort of a negative forward indicator.

 

[DJRR]

My stock picking record is 100%! Usually within a few weeks of buying a stock it tanks, never to return.

I guess my instincts are sort of a negative forward indicator.

+1 if I could only invest in a fund that would take the opposite side of each of my individual stock positions then I would be a lot wealthier Luckily I gave up after losing $20k. Took 7 years of capital loss write off to get over that one.

 

[HadEnuff]

Remember the rage for LDDS? Later known as WorldCom? I know lots of people who lost money on it. It happens. Average person should stay in funds.

Funny you should mention that. I caught that knife as it fell until it could fall no more. I felt like such an idiot, and considered for a while going to an FA, since I was too stupid, or too ill-informed to see that one coming.

then I noticed that my dad's FA had done the same thing in Dad's portfolio.

Then I read the 4 Pillars and some other stuff and became an AA/ index funder.

I have also learned over the years since then that my risk tolerance is not what I originally thought it to be.

to the OP, consider this: It is better for this to have happened now, and for you to have learned what is to be learned now, while you still have the option to keep working and reset your sails and your course, than to have had it happen a year or two after you retired.

 

[mrWinter]

And on top of that, my DH and I *both* invested our 401k's in pretty high-risk funds that did great while things were great, but ... well, you know the rest.

Not sure exactly what you mean by high-risk, but perhaps go do the math on what your balance would be if you had been in more conservative investments all these years instead. You may find you are better off even after the latest down turn. I imagine that would make you feel better if so. The end of 2018 in no way discounted all the gains since 2008, the more aggressive you were for the last decade the better IMO.

 

[VanWinkle]

Had a hot tip from my boss in 1985 for a company called New York Film Works. Great company that developed 35 mm film by mail. What could ever happen to a cinch deal like that....... Digital maybe? Well luckily, I only invest 500.00 into the penny stock and got to wallpaper one wall with the certificate. That was the last individual stock I owned. All mutual funds and graduated to Index funds. I always remember that loss, even though it was inconsequential in dollars, it left a deep scar.

 

[EastWest Gal]

We tried to understand options trading by investing $15K in options. Lost it within a year. Still don't understand it. Learned not to invest in something we didn't understand. We chose the amount based on: It's small enough to learn a lesson, big enough to make a difference if we struck gold. We didn't even strike rocks.

Live and learn. We've all made mistakes.