Sometimes it can be amusing to take a trip back in time and reflect on life’s experiences. That has got to be of general interest, right? Otherwise, how to explain Andy Rooney’s popularity over the years? (I can almost hear him doing this post for me!)
I was watching the news at noon today and the financial advice segment caught my interest – the expert had attended a convention of financial planners and had some fun asking some of them this question: “What is the worst financial decision you ever made?” One of the answers was from a man who said he bought a house even though he was a traveler by nature, someone who liked to move often to different parts of the country. Makes sense – you can’t gain much equity in two or three years and the closing costs eat you up, not to mention market variability.
Gosh, this could be a bit embarrassing, but what the heck, maybe some young person will read this and profit from my (our, if you comment) mistakes.
For me the incident that sticks out in my mind happened in 1964 when I was on my first shore duty tour in the Navy and we had been sent to Florida. I had to make a daily commute to work and decided to get a clunker for a cheap drive so Mollie could have our main car, a Pontiac station wagon. She really needed it because in addition to shopping our three sons were still infants (twins plus one), with all the attendant needs and unpredictability that situation brings. So, I looked for ads and ended up buying a Willys coupe for only $150. I didn’t have it checked out by a mechanic, all I cared about was that it ran. Boy was that a mistake. It had chronic carburetor problems and more than once Mollie had to push me with our other car to get the thing started. Embarrassing. Plus, it was ugly. Really ugly. And just to add insult to injury, the hood latch on the damned thing failed one day and I was faced with instant windshield blindness. Yes, the thing tried to kill me! If you ever want to test your heart’s strength, try that one!
I think the second worst financial mistake I ever made was buying a $30,000 life insurance policy that I didn’t really need. I was convinced by the salesman that the investment component was attractive enough to make it a good buy. I ended up cashing it in about 20 years later when the company changed to a “universal” type of policy and convinced me to change mine as well. It was only after I cashed it in that I found out the earnings were taxable. Looking back, I realize that my other, smaller policy and a modest term policy would have served the purpose much, much better.
When I talk about investments Mollie always reminds me of how we could have invested in a “growth” stock in Florida around the same time as the car incident. It was the first time I had ever dabbled in the stock market, but I had the thought that I likely couldn’t
lose. I just had that gambler’s rosy feeling. The broker steered me away from the stock Mollie had heard about, something called Polaroid. You don’t want those “growth” stocks, he said – those are ever so risky. So I bought a utility stock that never went anywhere. I can hear Andy Rooney in my mind right now. “Why is it that wives never, ever forget their husbands’ screw-ups? Why is that?”
But the good news is that I learned a lesson: buy low-cost no-load mutual funds from an investor-owned company and invest for the long term using dollar-cost-averaging, balancing between bonds and stocks. It works.
I wish I had a time machine to send this post back to myself in 1964, but alas, unless neutrinos really can go faster than light, ain’t gonna happen. Does anyone else out there have life lesson to share?