Last week I made a $13,000 mistake (a tax ruling, not in my favor due to most impressive stupidity on my part). In Warren Buffett terms, that mistake cost me $226,842 ($13,000 compounded at 10% for 30 years – see boys, I do know how to do math).
I won’t sugar coat it. It sucked. Big time.
But I can guarantee that it won’t be my last mistake, nor my biggest (yeah, much to look forward to). Making mistakes is part of investing (or any financial decision for that matter).
I was watching a financial call in show last week. The financial “expert” examined stock after stock. Many he dismissed because of the company’s debt load. It didn’t matter why they were carrying the debt, how recent the debt, or what kind of debt it was, his opinion was that all debt was bad.
What a load of hooey.
A good investor knows that most of investing is simple psyche 101, understanding people and what motivates them. That’s why the common advice, made popular by David Bach of the Finish Rich book series, of saving money on “little purchases such as lattes, fancy coffees, bottled water, fast food, cigarettes, magazines” makes me a tad bit crazy.
Little purchases? Find me a smoker that thinks cigarettes are a “little purchase.” Find me a coffee addict that thinks coffee is a “little purchase.”
A buddy quoted Robert Kiyosaki of Rich Dad fame to me a few days back, saying “Mutual Funds Are For Losers.”
(This same buddy invests in index funds which are technically mutual funds but that is an entire other post.)
Well, chock me up as a loser because I do hold mutual funds, both now and in the past.
Back when I was a financial young’un, I went to one of those free seminars hosted by a mutual fund company. Speaking there was a financial “guru” that I had admired for some time. I had read his books, watched his weekly tv show, and scanned his newspapers columns. I really thought he knew anything and everything about finances.
He was selling a can’t lose investment that supposedly not only provided a good return but saved the investor on taxes too.
What a great deal, right?
