$3,000,000 in mistakes -- my 7 biggest money regrets
UPDATE: My wife and I recently had our 2nd baby!
In between the burping and diaper changes, I have spent a decent amount of time reflecting on my biggest money mistakes. 13 years ago I started on a journey to build wealth. I can’t say that I always did the right things. In fact, I made a lot of mistakes. And now looking back, those mistakes have amounted to $3+ million dollars in either lost opportunity or lost money. In this article, I’ll be talking about specific mistakes and try my best to quantify how much money was lost.
“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.”
Mistake #1 - I left my first job and apartment after 10 months
I ended up leaving my first full-time job in March 2009 and had to pay back $8,000 to the company. The $8k included part of the sign-on bonus for the job and relocation package. And to add insult to injury, I had to pay several hundred bucks to break my 1-year apartment lease. I acted too hastily and did not look into the cost of breaking my contracts with my employer and landlord. Literally, a rookie mistake. I now read the fine print on all of my contracts.
Mistake #2 - I bought a brand new car in April 2009
While the whole world was suffering from a global financial crisis, my smart butt decided to go buy a brand new 2009 Honda Accord EX-L V6. The out of the door price was $26,700. I made the typical new college graduate mistake. I should have purchased a $5,000 car instead. The $21,700 difference should have been invested in the SP500 index in April 2009 for a whopping $94,600 in today’s value. I lost out on a $72,900 gain! This mistake was costly because I bought a car when everyone else was getting rich from buying assets. Another rookie mistake.
Mistake #3 - I sold all of my stocks in Dec 2012
Based on my email history I sold everything in Dec 2012 and then bought it all back in July 2013. My emails don’t show the exact price and quantity of the stocks that I bought, so I’ll use the stock market index as an estimate for how much I lost out on. In Dec 2012, VTI was priced at $73. In July 2013, VTI was priced at $86. That is an 18% gain that I lost out on. And that’s not even accounting for the taxes that I had to pay (i.e. tax drag). In reality, it was much more than that because I had sold all of my TSLA shares. More on that in Mistake #6.
Mistake #4 - I could have cashed out on my startup equity for $250K, but did not
About a year ago, I was offered $250,000 in cash from my previous startup to buy back the equity that I had in their company. After taxes, it would be around $180,000. This all happened before the pandemic, which was a once in a lifetime investing opportunity. I never included this number in my total net worth calculation because the timeline for a buyout is uncertain. However, this was the one chance that I could have taken out the money to prepare for FIRE. I regret it because I could have used that extra money during the pandemic buying spree, but at the time I was expecting $500,000 for my shares. Perhaps I should have put more thought into the decision.
Mistake #5 - I saved $300k mostly in cash
Around 2013, right after I had cashed out my investment portfolio, I ended up having around $300,000 in cash. It was a ridiculously large number to see show up as my Bank of America checking account balance. The opportunity cost here was massive--the market has grown 250% from 2013-2020. Also, I firmly believe that if I was more educated on investing and personal finance, I would have made a lot of very different professional decisions in order to further my net worth. But I only started to do such things after I started to invest a lot more.
Mistake #6 - I sold TSLA at $7, and again at $57
Tesla has been the one stock that I’ve bought and sold multiple times. Generally, I buy and hold. Or I buy, sell, and never buy it again. But Tesla has been one of those companies that have defied all the odds. The 2nd stock that I ever bought was TSLA at $4 per share (post-split price). I had only purchased $5,000 worth of it, and later on, sold it at $7/share. I then made another $15,000 purchase at $25/share and later on sold it at $57/share. On the bright side, I made $3,750 on my first purchase and $19,200 on my second purchase--totaling a ~115% gain over the course of 5 years. Not too bad. Except this is Tesla! Had I held on to them my first purchase would be worth $710,000 and the second would have been worth $340,800. In total, I would have had $1,050,800 worth of TSLA stock from an initial $20,000 investment. Pretty painful to miss out on the AMZN of the decade. My latest episode with TSLA is that I bought back in again at $436.69 for ~$20,000...just sad that the boat has already left the dock for a historic 100xer.
Mistake #7 - I quit my job at Facebook in 2012
As a young and ambitious engineer, I decided to leave Facebook at the age of 25 to join a 10-person startup. I remember thinking to myself, “I’m too young to be locked into working for a big company with incremental progress. Now is a great time to go explore, try big things. Facebook will always be there later when I want to come back.” And this is exactly right! Except, Facebook and all of the FANG companies were entering into an explosive period of growth. The initial stock package that Facebook gave me is now worth over $2,000,000. Not to mention the generous refreshers and their growth. “Refreshers” refers to yearly stock grants that companies give out to employees each year as a part of long-term compensation. I remember that I received 1780 shares of FB in my first year...that is $500,000 in today’s market. In addition to the loss of equity, I also lost out on professional growth as well. Many of my peers from that time period are now L7/M2 (manager of managers) or Directors. I won’t be as bold to say that I would have made Director, but I’m fairly confident that my yearly total comp would be north of $1,000,000 per year right now had I stayed. This was unquestionably my biggest financial and professional mistake. Google’s former CEO said it best, “If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.”
Man, that was a lot of mistakes! I think $3,000,000 in mistakes may be a conservative estimate, but it’s more important to learn and move on. In my next article, I’ll write about my top 7 successful financial decisions. I’ll talk about how, despite being a 1-income household and only spending 6 out of my 13 years of working in big tech, I am still able to pull off building up a net worth of $4,000,000 before the age of 35.
