What is the biggest financial mistake I have ever made, how did I overcome it, and what did I most learn from it?

The biggest?

Not starting my personal finance journey earlier.

How did I overcome it?

By making up for lost time.

What did I learn from it?

Better to start early. Compound interest, and compounding returns, is a big deal.

Once my personal finance journey began, common investing sins, such as fear, greed, sloth, ignorance would occasionally lead me astray.

But I bounced back.

One of the reasons I bounced back, was because I did not bet the bank on the investment (that is, I did not put all my money into the losing venture).

A losing venture can be anything from funding a business, to buying a car, to buying a house, to a stock or bond, if you don’t know how to manage the finances/ obligations associated with each of those purchases/investments.

Including the potential for loss.

You must always be prepared for loss.

In fact, you should invest only what you are prepared to lose.

In comparison to what people have lost on houses, cars, businesses, my investment loss story is a joke.

Even though it was not funny in the moment…

Minoo Jha

 · 6y

What are some stories about failure that can teach us some valuable life lessons?

Hi, You asked, What failure was actually a great life lesson? Losing money by investing in Krispy Kreme Donuts. Here’s the story from my blog: How I Lost A Thousand Dollars On Donuts There comes a time in every novice investor's life when he or she thinks they've found the Holy Grail. The Holy Grail is an investment theory or investment method that seems devilishly clever and original to the novice investor. One which gets them as excited as an archaeologist unearthing the tomb of Tut-Ankh-Amen. And which they just can't wait to hang their hat on. This investment 'find' could be any of a number of ideas. From the Dogs of the Dow Theory authored by Michael O'Higgins. To the Elliott Wave Theory popularized by Robert Prechter. From Joel Blatt's Magic Formula. To the Price to Sales Ratio which made Ken Fisher's 1984 book Super Stocks a best-seller. The novice investor will suddenly come upon one of these ideas and allow it to agitate the gray cells for a while. Then there's Warren Buffett. For the novice investor, discovering Warren Buffett is something else altogether. After all, he is one of the richest men in America. And he is also recognized as one of the greatest investors of all time. So no surprise that investors, novice and professional alike, become instant Warren Buffett groupies - hanging on to his every word, worshiping at the Berkshire Hathaway Annual General Meeting in Omaha, and dreaming of being a future Buffett. This is where my sorry tale begins. The Buffett Make-over I was just as susceptible to the Buffett investing charisma as anyone else. And after finding Buffett, I set out to remake myself in his image. This meant reading books such as The New Buffettology. And The Warren Buffett Way. And then getting down to business by applying essential Buffett principles. Bottom-fishing was particularly appealing. It allowed me to consider dog-house stocks such as Revlon, Rite Aid and Six Flags, which were all under $2 a share, maybe even under $1. But not content with that, I searched for what I thought would be the quintessential Buffett pick - an out-of-favor and under-valued stock, the one that Mr. Market was idiotically shunning. Enter Krispy Kreme Donuts. I have never been much of a donuts fan. But at the time, I discovered Krispy Kreme, I had become a heat-seeking Buffett missile in search of a target. And Krispy Kreme Donuts (Ticker KKD) appeared to be the answer to my prayers. Firstly, their cream and jelly filled donuts had become the new "delish" in donuts. People were shunning their corner donut stores and trekking to Krispy Kreme stores instead. Just Like Starbucks In fact, they were even willing to stand in long lines to get their Krispy Kreme donuts. Much as they do for Starbucks Frappuchinos and Lattes today. And just like Starbucks, Krispy Kreme donuts were pricey. All this had a distinctly Buffetesque aroma to me. Reading Motley Fool articles like this one sealed the deal for me. So when Krispy Kreme stock, which had stratospherically climbed to $40 a share, dropped overnight by 50% to $20 a share on a car-wreck of a quarter, I decided to lock in. And bought 100 shares. There - I had bottom-fished. Just like my hero Warren Buffett. I couldn't have been more pleased with myself. Or so I thought. Fasten Your Seat-Belts I was to find out (the painful way) that Krispy Kreme's 50% decline was just the beginning of its Drop-Zone like descent. By the same time the next year, the stock had declined to $10 a share. Giving my investment a 50% haircut. $1,000 gone. Just like that. Chastened and humbled, I took the loss and got out. The Flight of The Bumblebee I read somewhere that according to the Laws of Aerodynamics, a bumblebee should not be able to fly. The bumblebee of course does not know this, so it flies anyway. In much the same way, novice stock-pickers do not know that they don't know how to pick stocks. So they pick stocks anyway. Sometimes the picks pan out, sometimes they fall with a thud. When that happens, some investors will never be able to psychologically recover from their mistakes and losses. Others, phoenix-like, will rise from the ashes. I am of the second kind. I was able to take my medicine and move on. Are there rewards for naivety in investing? Actually I was able to make lemonade out of this investing lemon. I took my Krispy Kreme misadventure and turned it into a speech. Which I used to compete in a Toastmasters International Speech contest at Adlibmasters Club in San Jose. I won first place. And took home a trophy. Yes the mysterious Oscar looking thing you see above is my Toastmasters International Speech trophy. Now if only there had been some bling to go with that thing. You know - Like maybe a 1000 dollars? Oh Well... If You Are Ever Stuck With a Lemon, See If You Can Make Some Lemonade Out of It :) May You Invest Well in 2019 and Thrive!

With all the hits and misses in my personal finance journey, I was able to become financially secure over time.

And I want you to be financially secure too.

So here’s some personal finance advice, which can help you achieve that…

Minoo Jha

 · 6y

How can I become financially savvy?

Hi, You asked, How do I become financially smart? Here are my tips. It's a long list, not exhaustive, and some of it is cliched (but true). It is very useful advice for young adults to follow and I plan to pass it on to my daughter. Please pass it on to others as well as early as possible (which is soon after they start earning an income) 1. Learn everything there is to learn about income tax. Money management starts there 2. Start contributing to tax sheltered accounts (IRAs) as soon as you start earning an income 3. Maximize retirement contributions - IRAs, 401K, when you have a steady, regular job 4. If you get 1099 income for one or two years, open a SEP IRA or Solo 401K and maximize your contribution during those years 5. Have an emergency cushion (to support you for a year) in case you lose your job or (if you are a freelancer like me), to carry you during the gaps between assignments. I call this FMG Money - Finance Your Goof-offs Money. 6. Spend as little as possible on depreciating assets such as cars. 7. Spend less than you earn 8. Pay your credit card in full every month 9. Avoid bank fees by maintaining your minimum balance, not over-drawing, not having bounced checks, using only your bank’s atms, unless your bank refunds the atm fee when you use another bank's atm 10. Have money in both a checking account and a savings account. 11. Negotiate whenever you buy big-ticket items 12. Negotiate your pay and your raises 13. Read books about investments and money management; if you don't like reading, listen to podcasts, watch videos or go to financial seminars 14. Familiarize yourself with the law regarding loans and debt, because there are different laws for different kinds of loans and debt 15. Build up good credit as early as possible, so you can benefit from the best lending rates when you need to borrow money from a bank or lending institution, whether to buy a car, a house, or a household appliance, or even to get the best credit card offers 16. Familiarize yourself with what makes up your FICO score, get your free FICO score every year from Credit Karma or another credit score company, and study it 17. Make sure you know all the different options, premiums, coverage and exceptions and limits, when you buy insurance, whether health insurance, car insurance, life insurance, home insurance - including the impact of making a claim 18. Understand the full impacts and the penalties (if applicable) of withdrawing money from a tax-sheltered account 19.The time to take risks is when you are young, because you have time to recover from your losses. However they should be calculated risks as far as possible 20. Diversity your investments, not just across different industries and geographic regions, but between different assets - real estate, stocks, bonds. 21. Keep investing costs low by buying low cost index funds such as those offered by Vanguard 22. Invest in life strategy funds (offered by all mutual fund companies such as Vanguard), because they will automatically adjust your allocation between different assets based on your age 23. Use the tools offered by mutual funds companies and brokers to assess your risk tolerance and invest according to your goal horizon Stock-specific advice: 1. Diversify across different companies and different industries and different geographies. Buy a basket of stocks, or invest in a mutual fund tied to a broad index like the S&P500. Vanguard has several 2. Don't day trade (if you do want to become a trader, educate yourself - check out Brett Steenbarger 3. Don't try to time the market. Time in market is more important than timing the market 4. Don't panic in times of market crashes. Sit on your hands 5. Don't buy IPOs unless you get the stock at the IPO price 6. Do some DRIP investing, so you buy less when the price rises and more when the price drops. Check out Computershare, M1 Finance to see how you can do this 7. Invest in Life Strategy funds offered by Vanguard, or other mutual fund companies. They will adjust your investments between stocks and bonds according to your age, goal horizons, and risk preferences 8. Don't buy any stocks based on a tip. If you do buy, devote just a small amount of money to it 9. Invest in stocks in your taxable accounts and invest in bonds and cds in your tax-sheltered accounts 10. If you are burned by an investment, don't make it scare you away from investments for life. Learn from the mistake and move on 11. There should never be a point in time when you are completely out of the market. You may miss the big up days 12. Understand stock splits, including reverse splits - why they are done and what is the impact. See Revlon as an example 13. Know that there is a difference between a stock that has a high price, but may still be cheap - Google at $798 per share and a stock that has a low price, but may be expensive - Xerox at $7.13 a share 14. Include in your portfolio some dividend paying companies and reinvest the dividends - you can select this option in the manage your accounts section of the broker's website 15. Always keep some money out of the market, so you stay liquid and also have money for a good opportunity 16. Stay optimistic when the market crashes. Sometimes you may have to stay optimistic for several years. Stocks recovered from the 2007 crash only in 2014. 17. Fear, greed, sloth and ignorance are the 4 enemies of financial wisdom. Conquer these and you will do great

And here’s some more personal finance advice, the value of which cannot be overstated…

Minoo Jha

 · 6y

What are the benefits of living a minimalist lifestyle?

Here’s how I did it. I internalized Suze Orman. I started meditating. (The book “How God Changes Your Brain” gave me both my motivation and my technique). I stopped being a nervous Nellie about my future, accepting that the future was hamarey bas ki baat nahi (Hindi for “beyond my control/capacity/competence”). I channeled stories such as the Farid ud-Din Attar story about King Mahmud and the Beans. I started tracking my expenses. I found that knowing my average monthly expenditure was within a certain range made me oodles less anxious. I searched for and read books on downshifting like Your Money or Your Life. I found out how simply some folks were living (friends and relatives in India) and how happy and content they were. It helped me develop perspective. I realized that things are not always what they seem. That people who looked better off than me with expensive cars, nice houses, the latest gadgets and who went on fabulous holidays might actually be reeling in debt and have negative net worth. I also observed how many people who are better off than me fret more than me. This is because though they are rich in externals (the visible signs of a successful life), they are poor in internals (their internal life is messy). Peace and contentment can’t be bought. It is a gift you give yourself. You can be at peace even living in a crowded noisy apartment complex, whereas you can be in a state of turmoil even in the quietest most luxurious and secluded waterfront mansion. I know this sounds like a “sour grapes” rationalization, but I really do fret less than many people who are materially far better off than me. I discovered “Asteya” and made it one of my goals. Asteya is the discipline of taking from the world only what you need – without greed, excess, or wastage. I realized that producing something (expression) was more satisfying than owning anything (consumption). I observed that more stuff made me less happy rather than more happy – giving me more house cleaning, maintenance and security to worry about. And finally, I observed what made me happy. They were not things, but experiences. A good conversation. A good read. A walk or talk with a friend. A simple hearty meal. A guest post (hint,hint). A satisfying workout at the gym. Giving and receiving appreciation. Learning something new. My meditations. A fear or weakness conquered. An intellectual puzzle solved. A physical challenge met. And realizing this, I was able to cheerfully and contentedly declare “I’m good!”

May you live well in 2026, and thrive.

What are the most useless skills people pay thousands of dollars for online?

Most of the things that come with the lure of “plenty of money” for “minimal effort” are useless skills.

Most pyramid marketing schemes fall in this category.

Almost all “work from home” schemes fall in this category.

Do a bit of detective work, before you enroll yourself in any program marketed online.

“Buyer beware” applies not just to the stock market, but to acquiring skills as well.

A good product does not always mean a great stock (see my previous answer below).

In the same way, a good product does not always mean a product is easy to sell.

Before you try to sell products as part of an MLM team, get a job in sales.

Prove to yourself that you are a good sales person, and like being in sales first.

Minoo Jha

 · 6y

What's something about the stock market you wished you knew earlier in life?

Hi Francisco, You asked, What's something about the stock market you wished you knew earlier in life? Here are some that blew my mind in the early days (the surprises were all related to some foolish notions I had): 4 Foolish Notions I Had About Stocks And How You Can Avoid Them Foolish Notion #1: Great products equal great stocks I used to think if a company made a great product, it would ring up huge sales and net huge profits. What a quaint idea. For a classic example (where experience put paid to that idea) consider Tivo. Tivo invented the DVR. Tivo’s DVR is the #1 DVR in the market. But has Tivo’s stock gone anywhere as a result of it? Type the ticker into the search box at Yahoo Finance and see for yourself. Profits and consequently, stock price appreciation, have continuously eluded Tivo. Lesson to be learned: Don’t equate a great product with a great stock buy. Whether the company is Tivo. Or Vonage (whose product I love and have enthused about in the post 4 decisions I wish I had made earlier). Or Krispy Kreme. Even if you find their donuts irresistible, you may want to read my cautionary post How I Lost A Thousand Dollars on Donuts. Where I confess to foolishly trying to ape Warren Buffett and to one of my most painful and humiliating investing blunders. You don’t want to lose money that way. And you don’t want to lose money by making the mistake of investing in wonderful products that do not have wonderful companies attached to them. Foolish Notion #2: Conglomerates make good investments I used to think if a company had its fingers in many pies – meaning it was a group of companies rather than a single company (usually referred to a conglomerate) – it was a superior investment to a company with just one line of business. Bone-headed thinking! Not only are companies with widely different businesses daunting to manage (think of the Lilliputians trying to deal with Gulliver which explains Jack Black's appearance in this post), shady and shadow accounting is also a much higher risk with them. So if you are invested in one these conglomerate companies, I suggest you keep a close eye on them. And if they decide to break themselves up into different businesses each focused on its own area of strength, say a hallelujah! It’s what shareholders of Fortune Brands are probably saying, now that FortuneBrands has decided to sell its Titliest golf balls business, its Moen faucets business, its Master Lock business, in fact all of its non-core businesses. Once the sales are complete, Fortune Brands (which will be renamed Beam) will be able to concentrate on just one business, its core business: wine and spirits. Lesson to be learned: If you are tempted to invest in a conglomerate, whether United Technologies or GE or Fortune Brands, you should do so in the knowledge that you are being self-indulgent and that a company with a single line of business will usually fare better as an investment. And don’t be surprised to find that sooner or later, the conglomerate itself will come to the same conclusion and move to sell or spin-off non-core businesses. Foolish Notion #3: The Daughter Ship is Not As Good as The Mother Ship Sometimes when a company owns more than one line of business, it will decide to spin off a secondary line of business to shareholders. The spin off might be an automatic spin off. Or it can be one in which you as a shareholder, are asked to choose whether you want to continue to hold all your shares in the holding company, or to exchange some of them for shares in the company being spun off. What should you do? My advice (and I learned this through non-buyers remorse) would be to exercise the exchange option, even if you are nervous that the daughter ship may not do as well as the mother ship. A classic example is when McDonalds spun off Chipotle. Had you declined the offer to exchange some of your McDonalds shares for Chipotle shares, it would have been a serious mistake. Because Chipotle has increased 12 fold since it was spun off from McDonalds. Whereas McDonalds, while being on a tear itself, has only doubled in price. Lesson to be learned: If you are given the option to exchange some of your shares for shares in a company being spun off, always always exercise the option, even if you are a Nervous Nellie about it. You should exchange a small percentage of the mother ship's shares if that's all the courage you can muster. Foolish Notion #4: An Investment is Happily Ever After My post Yoga for Investors aptly sums up my philosophy about investments. I have developed a gritty Till Death Do Us Part determination when it comes to investing. However, I've learned that plans to stick with a stock for better or for worse, for richer or poorer, in sickness and in health don't always pan out. Just as bonds sometimes get called away, I have discovered cherished stocks can also get snatched away from one's portfolio in the blink of an eye. How? How is when a company you are invested in gets taken private. This is what happened to the shareholders of Neiman Marcus (Needless Markup, as my boss Judy used to wryly call it) - when it got taken private in 2005. And this is also what happened to the shareholders of Allied Domecq. Shareholders in Allied Domecq, the company that owned Baskin Robbins, Togos and Dunkin Donuts, were denied the privilege of baskin' in the sunshine of lifelong ownership. Because Allied Domecq sold itself. The Baskin Robbins (reason you might have bought Allied Domecq in the first place if you are like me) and Dunkin Donuts part of the business went to a clutch of private equity firms. The rest of the business (the bread and butter alcohol and spirits business) was sold to Pernod Ricard. And that’s how there was no Happily Ever After for Allied Domecq shareholders. Lesson to be learned: Don’t get too attached to the shares you buy. Private equity and other companies can snatch them away from you at a moment’s notice. Of course M&A doesn’t always result in a Where Did My Shares Go experience. Sometimes there’s the head-spinning (think Linda Blair in Exorcist head-spinning) Whip Lash experience, in which the original shares you bought are subjected to relentless M&A, so much so you get whip lash from keeping pace. For instance, you may start out by owning SBC shares, only to find out your SBCshares have become Comcast shares, only to find out your Comcast shares have become Cingular shares, only to find out your Cingular shares have been rechristened AT&T. This is the Whip Lash experience. The Allied Domecqexperience is different. In the Allied Domecq scenario, you have to bid your shares goodbye as they vanish into some private equity portfolio or get swallowed up by a larger company in an all cash deal (as Skype was swallowed up by Microsoft recently). Since both these scenarios happen quite frequently, my advice to you is to practice detachment from your shares from the get-go. It will save you from heartbreak and acute SWS - Share Withdrawal Syndrome.

As to why, most people fall for MLM schemes again and again, here are my thoughts:

Minoo Jha

 · 6y

If MLM is such a bad business model and most people fail why do so many people join it?

Hi, You asked, If MLM is such a bad business model and most people fail why do so many people join it? The main reasons people are attracted to MLM are as follows: