Thursday, November 18, 2010

If I had a million dollars

What would you do if you had One Million Dollars? I hate these hypothetical questions, but they are good to ask especially before you actually have that level of money.

People spend 40 years working and saving will understand the value of it because they earned it through hard sweat. I've also seen people who earn it through hard sweat but in a lot shorter period of time like famous athletes. Those who are good make that in a matter of months but what happens to their money in a few years? There are stories where they went crazy buying new houses, cars, throwing parties, and because they worked hard during the season, they partied hard during their off season... and in the end they don't have much to show for the tens of millions they earned.

Well, this past week was similar. Our two roths were up about 85%. Like I said in my previous post about being under-diversified. Well I hit a new high of almost 50k. However, not knowing when this run-up would stop, I kept our money invested in a couple stocks. In a matter of days, this 50k dropped to 35k. A 30% decline in less than a week. Since I was still up 30% for the year, I didn't fear much, but losing 30% in a week really hurts.

Which is why I have to ask you... do you have a plan for $10k? Do you have a plan for $100k? What makes you think you can handle $1M?

So here's the moral of the story: Unless you know what to do with $1000, don't even think about that $1M or more, because without a plan, in a few years you're just gonna waste $1M or however much you have. Whether its gambling in the stock market or gambling in the casinos or just gambling without a budget/plan, when it come to easy winnings, what follows is most definitely easy losings.

What can a budget do for you?

No comments:

Post a Comment