It was a lot easier to lose my first $100,000 than it was to save it. I worked every day of the week so that I'd have extra money to invest. I lived in a dilapidated duplex next to the pair I dubbed the "love couple" due to their loud arguments in the middle of the night. I bought my clothes at thrift stores before it was cool to "pop some tags." After 15 years of making financial sacrifices to save my first $100,000, it only took three years to lose it. Although $100,000 may not be a million dollars, it was supposed to be the seed money that would grow into my first million. While I still haven't come close to making my first million, I have recovered from losing $100,000.
Losing money on paper
A lot of people freak out because they have lost money "on paper." Maybe the value of their home is down or their retirement account values have reached all-time lows. In my case, I lost money on paper as well as in reality. We purchased our home for $183,000 and then watched it go down in value to $108,000. However, we waited it out as the housing market slowly recovered. Now our home is worth about $140,000. We plan to stay put. We aren't really looking at our home as an investment as much a place to live.
Picking stock losers
I lost my first $100,000 in the stock market. I picked several companies that went bankrupt during the Great Recession. I also picked some regional banks that never recovered after the recession. It took about three years for my first $100,000 to slowly dwindle as I was following the buy-and-hold strategy. Even as I was losing money, I continued to save money during the recession. I didn't lose my faith in the so-called "process." Some of my newer stock market picks increased in value which helped offset the losses. But nothing could really make up for the terrible feeling of having lost the hard-earned money that was supposed to be my ticket to long-term security and wealth.
Learning my lesson
Even though I have new money in my retirement and investment accounts, my first $100,000 was completely obliterated. I view it as an expensive lesson in diversification. I also should have been more willing to sell right away instead of following the outdated financial advice. Now I know that I'm taking a major risk by investing in individual companies that could go bankrupt. I also know that stock market returns are not guaranteed. Instead of saving and investing all of my extra money, I now use some of our money to pay down our mortgage and car loan debt.
I may have to work for every penny of my first $1 million or I may get a little bit of help from the stock market. Although I can't control what happens to my investments, I can pay of my home and cars so that I have tangible personal property that I can still live in if the stock market crashes again.
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