FT writers confess their personal finance mistakes
🔸 Plus: The British wine industry's bright future that never seems to arrive 🔸 Shoppers are carrying £3.4 billion in “buy now pay later” debt 🔸 What it’s like working at Goldman Sachs 🔸
Your 2-minute guide to demystifying money and making you richer
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(As of Friday market close.)
Financial Times writers’ personal finance mistakes
One of the most interesting personal finance articles of 2024 was published on December 27, right at the end of the year, in which finance writers for The Financial Times admitted their worst money mistakes.
The article is proof that even when you know how money works you can still fail to adjust your own behaviour or act irrationally.
The best thing about it is that even though these are highly accomplished financial professionals they still made all the same stupid mistakes that everyone does.
This is why we started Moneyin2 — to get you over these stumbling blocks. From the article (which for many of you will be behind a paywall):
Claer Barrett, consumer editor — lost £60K by not signing up for her work pension because she felt too poor
The useful thing about Barrett’s confession is that she added up what she lost by failing to join the pension scheme at her first job, providing a lesson in the value of compounding. She lost more than £60,000:
“I was on a fairly low salary, but I still reckon I could have amassed £15,000 from the combined total of my contributions and the company’s matched contributions over those years. I could have amassed £15,000 from the combined total of my contributions and the company’s matched contributions over those years. Had I invested this in a cheap fund tracking the US’s S&P 500 index, 17 years later that pot could be worth nearly £62,000 (based on average annual returns of 8.7 per cent over the past 20 years, but not accounting for inflation or investment fees).”
Robert Armstrong, US financial commentator — tried to time the market
We keep telling you: Don’t try to time the market. The ups and downs of the stock market can be scary but trying to sell when things look rough or buy when you think stocks are low is a surefire way to lose money compared to people who stay in for the long run. Time in the market beats timing the market:
“Back in the great financial crisis [2008], through the usual combination of luck and intelligence, I managed radically to reduce my exposure to stocks before the worst of the market crash took hold. Predictably, this led me to overrate my intelligence and underrate my luck. Even after the market bottomed and had started to rise again, I thought it was too expensive and it was not safe to get back into the water. Of course, the more the market rose, the more sure I was we were seeing an echo bubble form. Idiot! The result was that I didn’t get fully back into the market for years, missing huge gains. If I had learned a few years earlier that fear is often a buy signal, I would be a richer man today.”
Stuart Kirk, FT Money columnist — not buying property
“Turning down a 3,000 sq ft condo in Miami post-financial crisis for 80 grand.”
We cannot tell you how often we have heard stories like this over the years. A person is offered a cheap property at the “wrong” time, says no, and then — years later — lives to regret it.
Patrick Jenkins, FT deputy editor — buying the ‘wrong’ property
Who wouldn’t want the passive income coming from a “picturesque cottage on the Pembrokeshire coast,” as Jenkins describes it? But if you’ve ever owned a house you’ll know ownership doesn’t come free — there’s always something that needs fixing …
“My biggest financial mistake was probably buying a holiday home. … Repairing damage and breakages can get very expensive. … we’ve just completed a painfully pricey overhaul (sandblasting and sealing our underpinning steel beams, fixing a penetrating damp issue, new carpets, etc). This has wiped out more than a year’s profit from the house. In other words a gross yield of about 5 per cent has gone below zero.”
Katie Martin, markets columnist — saving in cash not assets
Martin actually did something really smart, which is to save into her work pension as soon as possible — getting the free company cash match and the tax breaks that go with it:
“As soon as I was able, I started paying into a company pension, and I’m glad of that every day.”
Despite that, her other savings went into cash, not assets, because the short-term volatility of the markets scares her. Worse, she didn’t do it inside a tax-free ISA:
“I’ve gone wrong in two main ways. One is that I’ve been too cautious. Over the years I have squirrelled away any spare bits of money in cash — nice and safe but dull as ditch water and not exactly a source of high returns (though it served me quite well in 2022 when stocks and bonds took a huge knock). Even more stupidly, until recently I failed to do that inside a tax-free Isa.”
Want to avoid these mistakes? Start here:
The Moneyin2 Guide to Wealth
The Moneyin2 Guide to Wealth will get you the biggest return on your savings by maximising cash matches from your employer, free cash from the government, and shielding your investment gains from tax. It takes you step-by-step through the world of pensions, SIPPs, ISAs and ETFs — all in plain English.
And for dessert …
The British wine industry has a bright future thanks to global warming. So why does the future never arrive?
British shoppers are currently carrying £3.4 billion in “buy now pay later” debt from credit providers like Klarna.
What it’s like working at Goldman Sachs. It’s not about the money, apparently.
“Meet the millionaires living the ‘underconsumption’ life: They drive secondhand cars, batch cook and never buy new clothes.”
A useful money calendar from The Guardian listing all the financial chores and opportunities you need to complete month by month.
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