Investing Gone Wrong: How I lost my life savings

wall street

My father taught me about money at a young age. By 19 I had already traveled to multiple wealth-building seminars across the country ranging in everything from stock trading, real estate and to making a living as a professional speaker. After meeting multiple millionaires I wanted that lifestyle for myself and trading stocks seemed like the best way for me to get there.

The Fast Rise

At the time the country had an oil shortage and gas prices shot through the roof. While most of my friends were whining about gas prices, I had invested in oil. The price of my stocks shot through the roof, and I made $2000 in a day. I was ecstatic. The next day, another $1000. I’d never been so happy to fill up my gas tank. With investments like this, I wouldn’t have to “work,” and not working sounded awesome.

I was hungry to make money fast. I’d just returned from paratrooper school, was well-educated and had a smokin’ hot girlfriend. I thought I was invincible. I’d been reading investing books and was ready to go big. I scrounged every cent I had and put it in the market. By 21 I was making almost $300 a month  in dividends from my stock investments, but I wanted more. I borrowed money from my brokerage account, known as margin. This increased my monthly dividend paycheck to $400, just for owning a stock! Life was going to be easy, and I could already picture myself retired on a beach at 25, sporting my banana hammock.

The Faster Fall

The combination of overconfidence and greed would turn out to be my downfall. The day the market crashed was like getting an elephant-sized suppository. My portfolio went from $30,000 to $10,000 overnight. I was in shock. It felt like that moment when you’re prancing around in the ocean and you turn your back for one second, and the ocean destroys you, tossing you around like loose change in a washing machine.

During a major market crash the experts say not to panic and ride it out, rather than selling your shares. They say to see it as a buying opportunity to get in at a lower price, but I didn’t have any free capital left to invest, so I sat tight and waited to see what the next day would bring.

I awoke early the next morning and logged into my brokerage account just in time to watch as my remaining $10,000 was wiped out, along with my hopes and dreams.  I was devastated. I sat there imagining all of the things I could have bought with that money; a brand new car, a trip to anywhere in the world, a better version of literally anything I owned. I questioned my decision to save rather than to be cavalier with my spending like my peers had been.

After a few days of sulking in the corner, I focused my energy towards ways of fixing my finances. I developed a plan to save more money and immediately made massive cuts to my budget. I was determined to rebuild my net worth as fast as possible. This time around I was even more efficient with my money and I put every penny I saved to work in a variety of interest-bearing accounts. My new approach helped me purchase a house at 23, allowed me to graduate from college debt free and landed me a job as a college financial coach where I now teach students how to be better with money. I still trade stocks, but now use other investments to spread out the risk.

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