My Regrets

Jonathan Clements

EVERY SO OFTEN, I’m asked about my biggest investment mistakes—and I really don’t have much to say. Yes, like many others, I dabbled in individual stocks and actively managed mutual funds early in my investing career. Yes, like everybody who’s truly diversified, there are always parts of my portfolio that are generating disappointing short-term results. But such things don’t cause me any regrets.

Instead, as I look back, my big financial regrets fall into four buckets:

Pound foolish. Almost everybody insists they’re a careful spender. The size of their portfolio—or the lack thereof—often suggests otherwise. But trust me: I really am frugal, occasionally to my own detriment.

My biggest mistake was probably spending too little on my first home. I could have afforded a more expensive place, but the money involved made me uneasy. Result: I ended up buying a rundown house that, over the next two decades, cost me more in remodeling than the home’s original purchase price. And, even after all that money, it still wasn’t that great a home.

But—and I know this sounds odd—perhaps my most enduring folly has been vacuum cleaners. Every time I went to buy one, I was struck by the huge price difference between the cheap versions and the expensive models. How much worse could the cheap vacuum cleaners be? So I repeatedly bought them and suffered repeated disappointment. Last year, I decided to mend my ways and bought a $300 vacuum cleaner. It was money well spent.

Enthusiasms. As a kid, I used to collect stuff—Lego, vacation souvenirs, stamps. That urge to collect has never completely left me. Over the years, I’ve amassed limited edition prints, old economics books, presidential campaign posters and more. At one time, I even had a copy of every article I’d ever written, as well as a binder filled with all the student newspapers I edited while at Cambridge.

When I die, my children aren’t going to want this stuff. In fact, much of it I don’t want. Whenever I can unload some of these things without triggering too many regrets over the time and money wasted, I grab it. All this is a reminder of why money spent on experiences, rather than possessions, is so much better for happiness. Possessions may deliver an initial thrill when they’re first acquired, but all too quickly they can become a burden.

Unwarranted worries. When I was in my 20s, I married a graduate student and soon had two children, all while trying to live on a junior reporter’s salary in New York. Our finances were extremely tight—and I was aware of every penny we spent.

An example: I remember a family vacation to California in early 1991. We used airline miles to book the flights. We stayed with friends every night except one, thus saving on hotel costs. Still, for me, the trip was marred by worries that we were spending money we couldn’t afford. I came to hate that feeling.

With the benefit of hindsight, I now know much of my worrying was unnecessary. Today, I almost never fret about my finances, even when the stock market nosedives or I get hit with a large unexpected expense. For me, that sense of contentment is one of the best things that money can buy.

Unasked questions. While I haven’t made investment mistakes that I regret, I have made two other financial blunders that pain me. Both involve real estate.

The first happened almost three decades ago, when I bought my first home. My down payment was less than 20% of the home’s purchase price, so I needed private mortgage insurance (PMI). The mortgage lender suggested that, instead of paying PMI every month, I pay a single premium upfront that would be included in the total amount I was borrowing. A quick back-of-the-envelope calculation suggested the single premium would be a better deal than paying PMI every month until my home equity exceeded 20% of the home’s value, so I agreed.

But I should have asked more questions and I should have thought more about it. What if I moved sooner, or made extra principal payments, or refinanced? Needless to say, it turned out I would done better opting for the monthly PMI.

That brings me to the current question I wish I’d asked. I’m trying to sell my New York apartment. Twice, I’ve accepted offers—and twice the deals have fallen through, though for reasons peculiar to the potential buyers, rather than to the apartment itself.

Still, I’m kicking myself for not thinking about the difficulties of selling the apartment before I bought it. At the time of the purchase, I thought I’d be leaving the place feet first. But instead of waiting until then, I decided to move to Philadelphia to be closer to family and friends.

The upshot: I’ve discovered that—no matter how spacious the apartment, how great its location and how spectacular the view—it’s difficult to sell a co-op apartment that’s in a building geared toward older folks, and which comes with lots of rules and high monthly maintenance payments. One day, somebody will walk into the apartment and fall in love with the place, just as I did. But in the meantime, I’m left to regret the question I didn’t ask.

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Playing DumbSmall Pleasures and Brain Candy

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