I normally talk about the habits of personal financial success, but today I want to tackle things from a different angle and discuss the opposite – I’m going to write a post about how to guarantee yourself financial failure.
WARNING: This post is written as a satirical piece and should NOT be taken literally or seriously as financial advice. The goal is to be humorous, not serious. Please do not use the content in this post to guide your financial decisions – all of the following content is written as sarcasm.
Imagine for a moment that our investing goal is to fail and become poor retirees.
How would we lose as much money as possible in the shortest amount of time and be sure that our future investments are just as disastrous?
Here are 10 effective ways to achieve our goal:
1. Neglect to save
If we keep putting more money into savings, especially if the savings exceed our expenses, you are not going to be very successful at failing. The key to guaranteed poverty is to spend more money than we have by using credit cards we cannot afford to pay off. We can also take up gambling, tear up any financial plans and budgets and just go with the flow.
2. Avoid productive assets at all costs
What if, heaven forbid, we unintentionally accumulate some savings? Don’t fret. All we need to do is leave it all in cash and wait for inflation to do its magic. Over time, it will ensure that our money loses more value each year. Under no circumstances should we look for the lowest fees and never, ever, put money into high-interest online savings accounts.
3. Forget about diversification
Diversification is not going to bring us any closer towards reaching our race to the poverty line. By not diversifying, we will be exposed to additional company specific risks. Try investing in a low-quality miner, small biotech or the next great idea. We must make sure that we put all of your money into those investments and success is ours.
Also, remember that broadly diversified, low-cost index funds that regularly outperform active managers are going to make us wealthier, not poorer. If we want to be poorer, we need to base our choice of fund managers only upon their most recent quarterly performance. Do not ask about fees. For those of us that are more adventurous, we can take a chance with macro predictions and trade commodities like gold and oil.
4. Start building lots of debt
To speed the process up a bit, amass as much debt as possible. My suggestion would be to use complex instruments like margin loans and borrowing to invest and trade. I suggest this because we can be forced to sell at exactly the wrong time. We just have to make sure that it comes with at least a 300-page disclosure statement. Shorting stocks are another method to get started on losing your money right away.
5. Trust your emotions and follow the fads
Tune into the business news frequently and pay close attention to the segments where they make recommendations about what to buy. That will ensure that by the time we log into our account online, everyone else watching that same news segment has bid up the price. When there is a market panic, we should always react and sell immediately.
6. Place Trades Very Frequently
Trading often will hasten the accumulation of brokerage fees. In addition, having the opportunity to make more decisions means more opportunities to fail. Regular trading will also protect us from those capital gains tax discounts and franking credits that are sure to derail our progress.
7. Have a poor financial plan
If there’s one thing that is essential for financial failure, it’s having a poor financial plan. This means no setting up of automatic transfers to savings accounts and investments, no budgeting and definitely no monitoring of our net worth.
8. Invest in high-risk assets
We should stay away from those safe, low-interest assets like bonds and fixed deposits. Instead, we should focus on high-risk investments with no track record such as cryptocurrencies or penny stocks that have a good chance of becoming worthless.
9. Make sure you get bad advice and hot investment tips from anyone
The key to financial failure is getting terrible advice from family and friends, or even better – your taxi driver. That’s why it’s important to surround ourselves with people who can provide us with misguided and harmful information.
10. Don’t think long term at all
We should never look beyond the next few weeks or months and always focus on the present. After all, you only live once right? Letting emotions guide our decisions, chasing returns, and not reviewing our portfolio performance will help us get rid of those pesky dollars quickly. We’re here for a good time; not a long time.
The Bottom Line
So there you have it – 10 foolproof steps to send us on the path towards poverty. Don’t worry though, if followed correctly, we can reach this goal in no time at all!
So let’s get started now and see what happens!
P.S. (Disclaimer) In all seriousness – please don’t take any of this blog post at face value. The opposite of the information in this blog post is usually true when it comes to personal finance. Please do your research, seek professional advice from a qualified financial advisor and/or accountant and find out what works for you.