The Most Important Money Lesson I Learned in College (or How I Lost $1,000 in One Day)

This is part 3 of 3 in our “My Worst Money Mistake” series. This is the biggest financial lesson I learned in college and a piece of investing advice that I’ll carry with me for the rest of my life.

As I stared at the computer, I couldn’t believe what was happening. All I could manage to do was whisper to myself “No, no, no, no.” Gone. All of it. All $1,000.

A Lesson in Betting on a “Sure Thing”

It was my senior year of college. I had some extra money in savings, and my dad suggested I try to invest some of my cash. I’d never owned stock in my life, but I figured it was as good as time as any to dabble in the market. It was 2008, and stocks were trading at historic “Pick a company that’s really cheap at the moment,” explained my dad, “but that you know will be around for awhile and make a rebound. Like a bank.”

“Like a bank…” the words still ring in my ear. It sounded like a fool-proof plan.

As a Seattle native, I’d grown up with Washington Mutual (WaMu). And, like a bank, it was a safe investment, and stocks were trading at a steal of a price at $2 a share (WaMu was trading at $45 the year prior). Even if the share price only rebounded to $4, I would double my money. I felt like I’d just figured out the game, and I’d only just begun playing.

Then September 25, 2008 hit.

Have you ever tried to walk into a WaMu branch since 2008? Yeah.. we all know what happened to good ol’ WaMu.

Reeling From A Loss

Technically, I didn’t lost $1,000 in a single day on the stock market. But when the news came in, it felt like I’d lost it all in that one moment, staring at the computer, watching the news ticker. “Office of Thrift Supervision takes over Washington Mutual Bank.” WaMu was no longer a bank, and my “investment portfolio” had dissolved completely, leaving me with only fond memories of my first foray into investing.

All of the eggs in my figurative stock market basket had been smashed into the ground. I no longer owned any stocks. Zero. Nada.

If there was ever was a worse feeling than losing $1,000 money, it was feeling like an idiot.

Going into my stock market adventure, I didn’t know a thing about investing. I had no idea what the market had been doing. I didn’t even bother to research WaMu’s history. I also blatantly ignored the news that WaMu’s debt had been downgraded by two credit agencies.

I relied on a hunch and some unsolicited advice. And I paid for it.

The Silver Lining in the 2008 Crash

But you know what? I couldn’t be happier having lost that $1,000. I experimented with the market and learned the most valuable lesson about money that I carry with me today:

You are responsible for your money and what happens to it. Period.

You can read all the financial advice you want, watch CNBC’s Jimm Cramer flail his arms around and yelling “BUY! BUY!” and buy the sexiest, most popular stock. None of those people have to deal with the financial consequences of your decisions. You do. And the one person who will care most when your investments have tanked is YOU.

I didn’t do my research. I didn’t understand the risk of investing in a single stock in a volitile market. I didn’t understand my own risk tolerance (it certainly wasn’t investing $1,000 in a company might dissolve in a matter of weeks!!)

Lessons Learned

So what does this have to do with teaching your kids about money? Here’s what I took away from my experience: Let your kids make mistakes with their money. Let them make financial mistakes early and often. But let them figure it out on their own.

By all means, please teach them about the risks and rewards of investing. But let them practice. Better that they lose $50 (or even $1,000) now than when they’re living on their own trying to scrape together enough money to cover the rent.

And for the kids and teens out there: In the off chance that you’re reading this, if there’s one mistake I’ll never repeat again, it’s this: don’t follow your parents’ investment advice 🙂

Interested in refinancing your student loans?

Here are the top 6 lenders of 2018!
LenderRates (APR)Eligible DegreesMore Info
2.47% - 7.80%Undergrad & GraduateVisit Sofi
2.47% - 6.32%Undergrad & GraduateVisit Earnest
2.47% - 8.72%Undergrad & GraduateVisit Lendkey
2.80% - 7.02%Undergrad & GraduateVisit Laurel Road
2.48% - 6.25%Undergrad & GraduateVisit Commonbond
2.57% - 8.69%1Undergrad & GraduateVisit Citizens

7 thoughts on “The Most Important Money Lesson I Learned in College (or How I Lost $1,000 in One Day)

  1. Money Beagle

    Similar thing happened to me way back in the early 2000’s. I had been doing some dabbling in tech stocks and had done pretty well. I started thinking that options were an even better way to go. You got a lot more exposure with your money, but the risk of going to zero was there as well. No problem, since everything was going to go up, right? At first it did and I was seeing regular 10-15% gains and adding up quickly. I was only doing ‘small’ trades so the cash gain wasn’t that great. Then I figured I really had it down, and took a similar approach, putting pretty much everything I had gained into EToys, which had gone down like 50% and I figured could only go up.

    Kept going down and my options were worthless in a matter of weeks. Lost every single dime I put in there.

    So, I know the feeling!

    1. Stephanie Halligan Post author

      “No problem, since everything was going to go up, right?” More dangerous words have never been spoken 😛

  2. jefferson

    the stock market is a fickle beast.. especially lately.. one-off investing on individual stocks can be quite risky. i try to avoid it.

    i do have my retirement tied up in a 401k, but that is mostly mutual funds, and thankfully more stable.

  3. Tackling Our Debt

    Sorry to hear you lost so much money. Investing is risky even for those that do research and do have experience. It is unfortnate because we perceive investing our moey as a good thing, but no one can predict the economy.

  4. Agatha K, The Fun Money Nerd

    LOVE your honesty here! I think so many of us have lost money this way but are scared to say it. Also, with stocks, I’ve seen that historically your return is higher if you keep your money in for the long haul. Short term investing is definitely MUCH riskier with stocks, especially these days!

  5. MyMoneyDesign

    Great lesson!! I remember Smart Money magazine was promoting them around the same time. I made a similar mistake with buying Delphi when they went Bankrupt. I thought for sure that buying it for less than a dollar would yield a great return if they bumped up to $2. Not so much! The stock was cancelled and it went all the way down to $0!! Fortunately my next pick Apple did much, much better!


Leave a Reply

Your email address will not be published. Required fields are marked *