Thread by @LifeAfterFI

Nothing worthwhile is achieved without mistakes. I’ve made my fair share on the path to #financialindependence

//THREAD// 👇

1/ When I first started investing, I didn’t have clear goals. I’d simply save up. While that’s not the worst thing, it meant my capital allocation was not in line with (then non existent) time-based goals and hence, I didn’t take enough risks for first 1-2 years.

2/ At one point, I probably had 30-40 different funds but without enough understanding of the underlying investment strategy, ideal investment horizon, risk, or tax implications. I was a sucker for NFOs. It took me over 12 years to prune my MF portfolio

3/ I didn’t buy health insurance for parents early enough because they were covered under my employer provided insurance. Over time, the employer provided policy changed to have co-pay, reduction in limit for parents, and a requirement to contribute part premium from salary.

4/ Then when I changed employers, the new one didn’t offer parents’ coverage at all. By then, they were in senior citizen territory and the only insurance I could find was the Varishta policy from National Insurance. It has low coverage limit of only a couple of lakhs

5/ I bought term life insurance in my mid-20s but only 6x my then annual pay. I’m lucky nothing happened and that this mistake did not cost my dependents anything but in retrospect, I should have bought coverage equal to at least 10-15x my then annual pay

6/ I bought a home too early (early 30s). I made a down payment of 50%. Had I put that into investments, it would have more than covered rent + appreciated to a point where if I wanted to buy a home today in my 40s, I could have done so comfortably in a more upscale neighbourhood

7/ I bought a ULIP back in 2000s; terminated it after 10 years and fortunately, the market had done well so got an annualized return of 12% but nonetheless, it was a mistake to buy a product I didn’t need merely because it was heavily advertised and had some tax benefits

8/ I focused too much on tax saving. Bought a ton of NSC and maxed out PPF investments for the first 5-6 years. Had I invested that in the market & stayed invested, the returns today make the tax savings look minuscule. Tax optimization is good but higher returns are often better

9/ My first car was a brand new one. I didn’t take a loan but met with an accident in the first week that left some permanent dings and dents on the body (insurance would only part pay for some parts and others were not covered).

9a/ Within the first week, the car looked 2-3 years old! I’d paid good money for a depreciating item that didn’t even look that good anymore!

10/ I tried direct stock picking based on a daily tips newsletter sent by my broker. Most of them turned out to be duds and while I don’t think I lost a lot of money, at best I made marginal returns very likely less than what I would have gotten even from an FD

However, here’s the important thing.

We can make some (not-too-large) financial mistakes and still reach early FI.

As long as we recognize, correct, don’t repeat, and have patience to let our money make money, FI is possible for many of us.

Possibly sooner than we think.

Hi @dmuthuk, one of your followers (after your previous retweet of mine) asked me for a list of my #investing mistakes. And I've put the same in the above thread. 👆

Perhaps more of your readers may find this useful & informative.

Hi @invest_mutual, @pvsubramanyam, @position_trader, @EWFA_ @KalpenParekh - I think your followers may find the above thread on my mistakes during the journey to FI useful. Please do take a look. Thanks in advance.