There’s never been any debate from people I’ve talk with – at some point in time I was a punk ass kid. The only real debate is if I’m a punk ass man or if I’ve finally grown-up. I suppose it depends on what part of my life we are talking about.
Things and people change … let me give you an example. When I was a 2nd semester freshman in college (April 1982), a friend and I saw the movie Porky’s. The theater was packed (with young people) and the place was roaring with laughter. I had an aisle seat and I literally fell out of my seat with laughter at least 2-3 times. And no, drugs and achohol were not a factor.
To this day, I’ve never laughed so hard in a movie theater in my life. Even a stupid movie can cause laughter in the right conditions. And the conditions must have been perfect on that night.
I watched this movie decades later (part of my watch anything COVID-19 binge) and still don’t understand why I felt like I did back then. Well, I’ve changed – matured, wife, kids, mortgage, working for 35+ years. Movies (or anything) like this just don’t have ANY attraction to me anymore. Does this mean I’ve grown up?
I bring this up because I know my approach to investing and retirement planning has changed over time too. For years (decades), I was an absolute gunslinger in stocks. I had no respect for my own capital that I was pouring into junk companies. Buy and hold meant 2 months not 30 years or longer today. I was looking for good ideas and eventually (finally, decades later) realized that stories don’t make money.
My Evolution
The first 22 years of my working career have been a disaster from an investment perspective. Sure, I had three job losses during that period and I started a family too. Both of those events are not great ways to build early wealth. But in 1987, my first job out of college paid $14,400. I remember that salary and job vividly. I worked in that first job for 20 months and it seemed like an eternity.
Given that I’m making about $300,000 this year, that $14,400 seemed so far away. I know what it’s like to not have money but it never helps when you try to live a life you have no reason to be living. Credit cards, car loans, and many other bad financial behaviors don’t mix well and doesn’t promote financial health. It’s likely that those early years impacted my investing behavior even though I knew better (finance degree, stock broker, and banker in the early years).
Punk Kid: You Dumb (And Unlucky) Bastard
I never had any money when I got out of college – car loans, rent, and restaurants took most of it. I tried to save money in my 401k and had probably $25,000 when I left my first job (6 years). At least I was smart enough to roll that money over into a IRA. And that’s when things got bad. I started speculating with that IRA money in penny stocks and, eventually, it was lost.
“Early in my work and investing life, I should have invested like a grown ass man instead like of a dumbass kid.”
Mr. TLR
That simple $25,000 from that 1st job could have been worth nearly $500,000 by the time I retired in 2025. That’s the main lesson for young people. What might seem like a small amount today can turn into some special by the time you retire. Time is your friend and the compounding turns even small amounts in small fortunes. Every $1,000 today can be worth nearly $25,000 in 35 years. That’s the way a young person should think.
Instead of buying junking penny stocks I should have put that money into Johnson & Johnson, Coca-Cola, PepsiCo, or an S&P 500 Index fund. Something quality-oriented would have beaten my total loss of those early funds. Early in my work and investing life, I should have invested like a grown ass man instead like of a dumbass kid.
Family Man: Stupid Mistakes and Lost Opportunity
In 2000 (that should be a red flag), my dad (who was a big speculator) convinced me that a small stock was the next big thing. The story was great, they were going to digitize all the medical records. I bought 1,500 shares of that $5 stock and saw it quickly jump in value. It seemed like every day it would go up a couple of dollars per share. Before I could blink it was at $25 and I wanted to sell.
My dad convinced me to stay in the stock and we know what happened next – the Tech Bubble burst. Listen, I was a grown ass man, capable of making my own decisions, and I could have sold. I had a family that could have used that $35,000 but within 1-2 weeks that big gain turned into a complete loss. That, my friends, seemed to be my investing story for a long time. And I have many stories of losing money, trying to hit home runs with small, unproven or junk stocks.
You hear stories of stocks going from $2 to $200 and I wanted my chance to hit that home run. But that’s a game for suckers. I would have had better odds playing black jack or craps in Las Vegas. The only positive thing to happen during the Tech Bubble Burst was that I barely had enough money to put a down payment on a home in 2002.
I started at a new company in 1999 (I’m still there) and have grown my salary from $51,000 to today’s $300,000. As a Punk Kid (age 23-34), I had three job losses as I was trying to start my life and career. Then as a Family Man (age 35-45), I’m hit with a Tech Bubble and Financial Crisis. Something had to change or I was primed to become another American retirement statistic.
Peak Earnings: Today, A Solid Plan and High Income Is Saving My Retirement
The first 25-years of my working life destroyed me financially. Coming out of the Financial Crisis, I immediately went back to trying to hit home runs because I knew I was running out of time. Small stock after small stock found my “investment” money and many went bankrupt. I was suffering from bad personal financial decision and bad luck as I was heading into my peak earnings years.
Finally, I had that panic moment where I started to turn things around. Honestly, it was a behavior change that positively impacted my spending and investing. I focused on my finances – credit cards, home equity loans, mortgage, and car loans were crushing me. I was 48 years old, had a $115,000 net worth, and I had two kids just getting ready to start college. If there was ever a time to become a grown ass man this was it.
I’ve not benefited from the unprecedented market rise from the March 2009 bottom. And I’m sure I’m not the only one to say that.
Here is the brutal truth …. after the Tech Bubble burst, the Financial Crisis, and many (many) junk stock losses, I trusted nothing. I’ve become very risk adverse and I’ve not benefited from the unprecedented market run from the March 2009 bottom. And I’m sure I’m not the only one to say that. Sadly, my 401k has been in cash a majority of this amazing market run.
I’ve taken so much risk and been crushed by the big market crashes that I went into protect mode with my 401k. In the last 4-years, paying off debt (over $250,000) and building a portfolio of individual quality stocks in a taxable account. I didn’t want to risk any more losses and my 401k was the last thing I could protect. If I had done what I’m preaching to my kids then I’d be worth millions today.
Retired: Come Hell or High Water, I’m Retiring In 4-Years
I count my blessings for many reasons. First, I came to my senses before it was too late. I started a plan that should give me an opportunity to retire by 62. Dumb mistakes, bad luck, and horrible personal finance behavior was ruining making me just another American retirement statistic.
Second, I’m blessed to have a company pension and retiree healthcare when I retire. And not just some $500 per month pension. I’m talking $70,000-$80,000 annual pension due to my 26-27 years working at the same company. That is a blessing because most people either don’t have that available to them or they move jobs so much that they only end up with that $300-500 monthly pension benefit.
Finally, my higher income is allowing me to crush my debt (I’ll be debt free by August) and have a 45% savings rate. Next year, I’ll have a savings rate over 60% to partner with my $300,000 work income. This is when the good times will roll and my retirement will be saved. I wished I had started sooner but that doesn’t help me now. I could work longer but that’s not going to happen.
Seriously, the only thing that saved me was that I woke up and realized I needed to make urgent changes to my finances. No pension or high income would have bailed me out without that occurring. Financial habits is the main thing people need to change because most don’t have the pension or high income to offset years of financial neglect.
Summary
Here’s the sad bottom line … I’ve not participated in the market’s rise over the last 12 years. My early job losses meant that I had little to no money to invest. Heck, with a family in tow I was just trying to survive and put a roof over my kids head and food on the table. Any money I did invest was done poorly. Plus, I got beat down in the tech crash in the early-2000’s. As I was recovering, along came the financial crisis.
Most of my money during the 2009+ market rise has been in a 401k and I’ve played it very safe (too safe). As I was swinging for the fences with junk stocks, I was trying to protect my 401k. Since I’m closer to retirement, sequence of returns is important and my lower equity portion makes some sense. But I’ve got a good pension so I should have been more invested with equities. I suspect that fear (emotional investing) hurt my portfolio.
Without the early job losses and poor investment decisions, I’d probably be retired right now. I’ve accumulated virtually no assets via compounding and that is truly sad. At this point, my savings rate and debt reduction are the most important aspects to my retirement planning. With that, I’m succeeding and this will save my retirement. I suppose this finally makes me a responsible grown as man. My kids are learning from my mistakes and I suppose they are already grown ass women.
Thanks for reading!
Mr. TLR