Investing Lessons: How to Invest, Trade & Achieve Financial Freedom

And I am a recovering financial wreck. My finances and my life fell apart about 7 years ago. I lost all my savings, my job sucked and my family was drifting away. Part I is an introduction to my financial journey.

Financial House of Horror
Circa 2000. I was making six figures as an IT senior manager, spending lavishly (vacations in Europe, catalogue shopping, wining & dining) and saving very little. My stay-at-home wife was raising our two young kids ages 4 & 1. We bought a house in suburbia for the growing family and filled it up with stuff.

I had about $25K in savings that was invested in internet mutual funds, internet stocks and biotech stocks. I believed the hype about the new economy and how the internet will change our lives forever. Investing in hot technology companies was in vogue and that is what I did (my broker helped me select the best stocks and mutual funds). I was too lazy to register for the company 401(K) account and thought it was too early to invest for kid’s education. Oh yes – I bought a new truck in 2000 by pulling out all the equity in the house (about $20K).

It was the proverbial paycheck to paycheck living but life was good. The American dream – house, family, job and easy money. My $25K investment portfolio doubled to $50K and chasing hot IPOs become a hobby.

Then the market crashed. My portfolio shriveled up and lost 90% of its value in a matter of months. My financial situation was dismal - no savings, car payment, house payment, equity loan, young kids, single income, offshoring, no retirement savings, no college savings. The music had stopped, the party was over and I had a massive hangover.

The Road to Recovery
So did I learn something from this fiasco? Yes - I learned that I am in-charge and need to be accountable for my finances. It’s my money, my life and my future – if I don’t pay attention to my financial well being then who will (yes – I fired the broker). From then to now I have invested my time, effort and money to change my lifestyle, learn about investing, implement a financial plan, think long term and set a goal to achieve financial freedom.

The Ultimate Goal – Financial Freedom
To me financial freedom is sustaining my current lifestyle without having to work as long as I live. No I have not figured out how to get to that stage. Some more tangible goals that I am trying to achieve in the interim include

Pay Off My Mortgage – Logically you can make an argument that mortgage debt is not bad but psychologically I would be happier without a mortgage.
Fund My Kids Education – I want to be in a position where I can support my kids through 4 years of college. It’s a moving target in terms of price of education (inflation, private versus public etc.) but I am chipping away towards this goal.
Retirement Savings – I invest in my companies 401(K) account. I am not worried about a target amount at this stage – just want to sock away what I can.
Average Returns – I want my investments to generate average returns of about 10%. It’s been a bull run for the last 5 years so achieving 10% return has been easy but so far so good.

What Now?
I have learned a lot in the last 5-7 years. I am more confident about my finances. There is a long way to go and I try to learn something new everyday. I believe strongly in sharing. Sharing what I have learnt and eager to hear about your experiences. And that is Investing Lessons.