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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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June Elizabeth Dosik
June Elizabeth Dosik
11 months ago

Good article tinged with pathos and humor!

Jack McHugh
Jack McHugh
11 months ago

My biggest investment mistakes were everything I ever did before finally getting whopped upside the head by the concept of buy-hold-rebalance low-fee index funds.

Just in the nick of time too. “Hi my name is Jack, and I used to think I knew something about market behavior…”

Sorry to hear about the apartment. In my experience (thankfully not me but close to me), you know you’re in trouble on real estate when talk turns to finding “the right buyer.” Uh-oh…

ScubaSkier
ScubaSkier
11 months ago

My biggest regret that listened to Financial Advisors and saved too much for retirement. I didn’t save nearly as much as they said I should but now, in my 70’s, I have more than I ever dreamed I would have and more than I will need. And I can no longer do all the things I could have done 20 or even 10 years earlier.

Langston Holland
Langston Holland
11 months ago
Reply to  ScubaSkier

I think you posted something similar to this a while ago on HumbleDollar, but whatever the case, this is an extremely valuable and unusual perspective. Thanks. 🙂

SanLouisKid
SanLouisKid
11 months ago

Many years ago I read a publication called How to Do Everything Right by Bottom Line. I thought it would be a great idea to do everything right. I found out that wasn’t possible.
What I ended up doing was trying to avoid major mistakes. Small mistakes can be handled. It’s those large ones that get you.

Roboticus Aquarius
Roboticus Aquarius
11 months ago
Reply to  SanLouisKid

You’re in good company. Charlie Munger says much the same thing: the smartest thing you can do is avoid big mistakes.

medhat
medhat
11 months ago

Insightful as always, but I would offer something for consideration. “For me, that sense of contentment is one of the best things that money can buy.” Unfortunately, for some others, no amount of money can buy contentment. I know a few of those people, and feel for them. They look like they’re winning a race they don’t want to be in.

Helpful Neighbor
Helpful Neighbor
11 months ago

I have made my share of mistakes throughout my life. First one that comes to mind is a fancy car.

R Quinn
R Quinn
11 months ago

Geared to older folks? I be one of those I think. My condo is in a 55+ community of nine buildings each with 12 units. And yup there are rules. It wasn’t too bad until the virus hit and then those older folks became paranoid. On the other hand I’m guessing the average age is 70+ so concern is warranted. The HOA is $779 a month and my taxes are $12,500 so I’m not sure that is less total costs than my old home even with maintenance expenses. But the good news is in two years my condo went up $80,000 in value and so far those for sale are gone in a few months. Overall though I think it was a good move because I never did like mowing the lawn and my DYI skills are non existent.

Roboticus Aquarius
Roboticus Aquarius
11 months ago

My most embarrassing mistake was thinking that my F500 company’s business arrangement to provide fiduciary advice was a good idea. We went with the recommended company, and found ourselves in the worst of investment worlds. High fee front load funds in a wrap account. Talk about feeling stupid. This is what started my determination to learn enough to invest without an advisor. Mistakes are the price you pay for expertise.

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