My Money Early On

Before I got started on my personal journey to my first million, my money situation wasn't much worth talking about. I had never really considered the idea of systematically trying to build wealth. I don’t mean I had never saved money or never really invested, though – quite the opposite.

Raiding the Piggy Bank

Ever since I'd been ten or so, I had been compelled to save money to buy my “toys”. Saving money was the only way for me to get a bicycle, camera, surf board, or anything else my parents considered "just a fun thing to have, not a necessity". And believe me, their definition for necessities was pretty narrow!

In fact, I was almost all the time saving money for my next "fun thing to have". What we didn't have in our family, though was the idea of "saving for the rainy day" - or even less, saving in order to invest. Or maybe my parents did it, but they sure didn't talk about it, so no-one told me! To be fair, I certainly wouldn't have been interested either. I was already busy saving for the things I really needed - or at least badly wanted - so the rainy day would have had to wait for a long time in any case!

So, my idea always was that I would save in order to spend, for a specific purpose, and for a definite – and usually the shortest possible – period. Instead of really saving money, I would just temporarily not spend it over a period of time in order to definitely spend it a bit later. It never occurred to me that there would be any point in saving money for the specific purpose of investing it. Investments were for me just a temporary way to hold my money - and maybe with some luck earn a few extra pennies while at it - until that money would be spent for something "necessary".

Calculator and Dice

Similar to my idea of savings, my idea of investments was… well, let’s just call it “intuitive”. I would invest only if I had something to spare – which was in any case seldom. I would then just buy whatever stocks that happened seem good at the time, and that was really it.

My criteria for selecting my few investments varied, and I sure had no method of any kind for selecting stocks, except my intuition and gut feeling. With the benefit of hindsight, it seems my intuition could have used some improvement and my guts never had much of a proper feeling either. My investment outcomes varied from OK to disastrous - mostly depending on the market performance - and in any case remained below-the-market most of the time.

On a Rollercoaster

Sometime in the early nineties, for example, I bought a stock just because it was selling at above $500 - without any specific reason I was convinced that a stock with such a big price tag must be a real winner. (Yes yes, I know what this sounds like: "What a moron!", you think, and yet, it is true!) Of course, very soon after I had bought that stock - luckily just a couple of units as that's all I had - we entered a quick but deep recession. I lost most of my money on this stock as the share price fell to less than half in no time at all.

Another time, I put my money - the little extra I happened to have - into an IPO (Initial Public Offering) just because all IPOs that time were selling like hot cakes. Of course, my stock too went up 20-30% almost immediately, but then started falling and was way below the purchase price just 6 months after the IPO. Needless to say, the price kept falling, and I think I sold at the point when it was 30% below my purchase price. Eventually I was happy having sold, though, as the stock kept falling until the company went bust just a couple of years after.

Upwardly Mobile

No savings to mention, and only temporary investments that got beaten by the market big part of the time. That's what my money situation and financials looked like. I wasn't worried though: I was young and in a fast-moving upwardly mobile consulting job. I was making about $5000 a month plus really nice benefits and bonuses - all this was pretty good at the time and much more than most of my friends were making. I was getting promoted regularly and figured it was just a matter of time that I'd be having a six-figure annual salary. My wife too had a nice well-paying job, we had a nice big house and a brand-new car - German make of course. It didn't really feel necessary or even useful to worry about the state of savings, or investments - my job and income were all that mattered to me. Everything in my life seemed in great shape and just getting better and better.

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