Our Top 10 Financial Mistakes

We believe mistakes are the stepping stones to wisdom. So we try not to mull over too much over our past mistakes, however we try not to repeat them. We also believe it is even better to learn from the mistakes of others. So with that intent in this blog post we are sharing with you our top financial mistakes.

Experience is simply the name we give our mistakes. – Oscar Wilde



Both of us are guilty of starting our personal finance journey late. We both were focused on making more money than to save and invest it.  In early years of our career we both kept substantial amounts of money in savings account rather then investing it towards a future goal. Funny part is we even did not put it in FDs.


Sugandha: Once I reached 30% tax bracket, someone suggested ULIP as a tax saving and investment instrument. Without thinking much I invested in 4 different ULIPs with lock-in of 3-5 years. Later on when I evaluated my portfolio holistically I realised all four ULIPs put together were offering me low life cover as well as low return on my investments.

I ended up discontinuing two out of 4 ULIPs and lost 60K that I had already paid in the instalments.


Naren: I moved back to India to start my own business. A year and a half later, just after getting married I applied for life insurance but my application was denied. Turns out life insurance is given only based on multiples of current income (15x, 25x etc)  since the rest of the assets are assumed to go to the nominee anyway. My business income was not even a fraction of my old salary at that stage and so I did not get a decent life cover. I had to wait for 3 years for my business income to increase before qualifying for life insurance by which time the premium had increased a lot due to my age.

Similarly my wife had a credit card she had acquired while still at her job so she had a decent credit limit based on her past salary which we could use for emergencies.

My advice to anyone quitting after FIRE or before is to make sure to leverage your job salary to sort out issues like life insurance, credit cards etc. which depend on “current income” to qualify.




Naren: When I went to the U.S for my post-graduation,  I found credit card companies had set up stalls right on the college campus to give credit cards to students like us with no credit history.  Best of all they gave it away for 0% interest rate for the first year or two. Our seniors warned us to be disciplined about paying off the bill every month. Boy! how I wish I had listened. With a low salary at my first job and a student loan to pay off, I started racking up credit card debt for discretionary expenses. Once the 0% interest rate offer ended, I would “roll-over” the debt from the first card into another card offering 0% interest rate for another year kicking the can down the road. At one point I probably had 10 different credit cards! Finally the music stopped and I was under a lot of credit card debt which took me years to pay off. I get shivers just remembering how stupid I was. Today I have only 1 credit card which I pay off in full every month no matter how big the amount 🙂



Naren: While I was enjoying my initial years after college fuelled by my credit card spending, I got a call from my Father one day asking “When do you plan to start repaying your student loan? Our house is on collateral with the bank and we’ll get it back only if you finish paying off the loan. My monthly pension amount is being deducted towards your education loan interest”. That was a wake-up call.

Turns out I was not even aware that you need to start repaying the loan six months after getting a job. Meanwhile interest was compounding on the student loan. My already retired parents had been  paying the interest while I was in college so I would not be burdened with a big loan amount upon graduation. But now that I had a job they wanted to get back both their pension and house given as collateral to the bank.

That phone call from my Father was a big turning point in my financial life as I started to cut down expenses drastically to pay down both my student loan and credit card debt. I sold my car, moved closer to work, started using public transport, downsized from renting an apartment to sharing a house with 4 room-mates, started cooking at home etc to finish paying off my education loan within the next 3 years. Soon after I paid off my student loan and credit card debt, I felt free to quit my corporate job and take the risk of joining a startup.


Naren: Since I was drowning in debt that required a constant pay-check to service, I was constantly afraid of losing my job. I was sure that if there was a layoff I would be the first to be axed. Looking back I’m surprised at myself because I was always an above-average performer. So this fear of job loss was just blind fear based on office gossip.

The right thing to do would have been to put in a safety net to address the legitimate possibility of job loss. Simply saving up 6 months to 1 year of expenses as safety net would have dispelled this fear since I could always find another job in 6 months or 1 year max. But because I had so much debt, I did not have any savings left to build a safety net. Because I was always fearful of losing my job, I did not take even basic professional risks that would have increased my salary. A classic case of financial mistakes causing one to dig a hole and bury one’s career. Yikes! just shows how financial mistakes also have a ripple effect on other parts of your life.


Naren: Year 2008. The financial crisis reduced my IRA (U.S version of India’s P.F) to 50% of its value overnight. I had just started working at a startup and had no emergency fund other than my retirement fund.  Driven by my usual fear of job loss,  I withdrew the entire amount from the stock market and left it sitting as cash in my retirement account  for the next 3-4 years.

I did not even listen to the advice of my street-smart best friend who advised me to counter-intuitively invest more money in the market since everything was so cheap. The market not only recovered in those 3-4 years I was sitting on the sidelines but went on to become a bull run. This meant that my retirement corpus lost all that compounding and earning potential.

Irony was my 1st corporate job was in Wall Street but I never understood personal finance in my own life! Instead I aggressively invested savings from my salary to buy an apartment in India. That did not turn out well as I’ve written in detail previously 🙂


We both spent 10 years of our career earning without clear financial goals in our mind. The most we thought of was the expenses we had to incur in the current year. This led to lot of wastage on discretionary spending- clothes, eating out, partying etc.. and poor investment choices.

Once we started Goal-based planning we realised how amazing it is to put a clear goal towards our desires and dreams. Goal-based Financial planning helped us prioritise what is most important to us and how we can secure that first. Once we started prioritising, the things we thought were impossible became possible (such as achieving FIRE) . It also helped us eliminate things which do not fit into our lifestyle and simplified our life.




Naren: One of the reasons why I had such poor financial habits was because I was bitten by the startup bug since college. I thought that one “win” from a startup would be enough to “set me for life” and I could retire early.

So I did not believe in saving steadily via SIP and letting it compound over time. Compounding happens so silently for the first 10-15 years that people with short-term focus will not understand it because its true power explodes only after 15-20 years. There was a lot of glamour associated with working at a startup because of this “lottery potential” even though there wasn’t the usual career progression or high corporate salaries/perks.

In my case, we did not win the lottery. In retrospect, I picked up a lot of valuable skills that helped me start my own business. The salary from the startup helped me buy an apartment without taking a loan. I made connections who went on to become my business advisors/partners. Did it make me rich? No. But did it make me wealthy in experience? Yes.


This one was so bad that I wrote an entire blog post about it 🙂 The Short Story: The apartment I booked in 2008 for Rs.3000/sq.ft is now going for Rs.4500/sq.ft in 2018 ten years later. A grand CAGR of 4% for a 10-year investment.


Simply reading all the above mistakes makes us groan in horror & facepalm. We are amazed that we even have savings haha 😉 Even after making all these mistakes we are on track to retire early by 45.

Now imagine someone who does not make these mistakes: they can easily retire early by age 35 if they wanted.

Did you make mistakes you can’t get over? share them with us in the comments.




  1. Naren,
    Thanks first for the wonderful blog. I definitely have a lot to learn. I am 35 now and started investing only an year back but I am happy that I am making huge strides.
    Imade similar mistake like you to buy an apartment in Bangalore using home loan. I also had another home loan in my native though I am glad I closed that loan. I made a terrible mistake of using my PF account in India. It’s been more than three years since I came to US though I realized all the mistake and prudently started with 401k as well as equities like stocks and ETF. Also continuing my PPF in India. I am glad that atleast I learnt about finances and have been seriously exploring venues of investment and it couldn’t have come at worse time.

  2. Thanks a lot for creating this website and sharing the details…Its great to be financially free and the confidence it gives is really great. I have recently started my journey to be financially free, i have set my goals, started investments accordingly…planning to increase savings a lot and closing the debt soon

    I completed by B.Com in 2003 and immediately joined a MNC company in Finance Back office team and started earning. Luckily i did not have the mind to spend lot, got a bike, got mobile phones…but got bike/Mobile only to the budget of what is required and did not pay too much. Bought land in the age of 24 and constructed a house in the age of 27, married in 28 and with two kids now in 37.

    One mistake i did during the process was i always invest in realestate. Bought land again when my son was born and bought a second house. My second house really dried all my liquidity, lot of Pre-emi interest, very less rental yield, high interest cost, and tax advantage removed (the reason why i bought) Struggled to meet expenses and EMI, worked hard and increased my salary and started again to save

    Couple of years back spent 22L for my father hospita expenses (which i dont regret at all since the satisfaction it gives that I took care of him) since i dont want to treat him a normal hospital and again all cash dried up. Relied only on office insurance which had only 4L insurance and fortunately office topped up another 4L from their common pool.

    Again started building my cash, all the above happened from age 20 to 35, i did not buy a costly car, did not spend too much for marriage.

    Good thing is, every bulk expenses is behind me at the age of 37 since i started early and inspite of mistakes and cash crunches. I left foreign jobs because i want my kids to be with my parents. All through my wife supported me without which i was nothing.

    Now again in phase 2 of my life, increasing my savings, collated my goals and investing towards the goals. Learnt equity investing in the last few years and diligently trying to build the equity PF, NPS and EPF.

    All we need is reduce expenses, increase savings, cagr at 10 to 12%…..

    If we can have a community to share our thoughts…it will be great…

  3. Your points are so relevant, I wish I had read them some 20 years back. Goal based investment is so relevant, other than that there maybe no investment value as such. Maybe you too go the MMM way and open a casual office/home where we an meet and talk regularly about FIRE.

  4. Great NG, you had a financially prudent father. You are lucky!

    Starting early in personal finance is the holy grail and you happen to reap the reward of this in your life.Keep up with your annual pilgrimage.Your discipline is commendable. Tax-free instruments are essential in Retirement portfolio.

    However, We think it will be a good idea to have diversified portfolio in both equity and debt (equity exposure depending on your risk profile). We are not a big fan of direct investment in stocks (not qualifies also), we use MF’s to invest in Equity markets.

    • Hi Naren,
      Thanks for your kind words ,yeah i am lucky to have such kind of Father who not only helped us 3 brothers to reach where we are but also the whole extended family from both his and inlaws side 🙂 . Not that we did not sacrificed ,but if he had not dreamt big and moved out of his native village ,we and our extended family would not be able to come to this stage in life .Will share more about him as an when time comes.

      Regarding investment in MF , after searching lot of sites like valuereseach,moneycontrol and seeing the kind of financial scams in our country at the topmost level including mutual funds (pls check capitalmind website )i am not getting much confidence in the sip business .Also the kind of reasearch you have to do for investing in mutual fund(especially for the fund manager ) is almost same as researching for a company itself to buy its stock . But details about a Fund manager is not readily available and there are very few MFs who has given more than 10-12% of return over say 5-10-15-20 yrs time frame consistently .
      I would be happy if you can find any MF who has given more than 12% return in the above time frame .

      Since i am conservative investor i am ok to get 8-9% return in PPF,SSY,PF, FD,Gold (15% in each of them ) and direct equity (30% )instead of doing too much of research in MF .

      Inspite of all these scams , none the less i believe in my country and i hope one day things will be better for the so called “Mango Man/Woman” .

      Really getting inspired through your blog , All the best to you & Sugandha and keeping this blog going inspite of managing a new born .


      • Hi Nirjhar
        Thanks for sharing your personal story. A lot of us have moved from villages and towns in just one generation. While getting a well-paid job is step one, the next step is a well-funded retirement to secure the lifestyle move made from village to town to city.

        Glad to hear you find our blog inspiring. The idea we want to promote is that it is possible for everyone to secure their current lifestyle permanently just by investing consciously and early.

        A fund house like Franklin Templeton has many equity mutual funds whose CAGR is in double-digits over 10+ years.
        Though we agree with you on rampant mis-selling in MF. All investments have their share of mis-selling— so it is only buyer beware. Even with stocks you cannot predict a dishonest promoter like Satyam. We read shenanigans of mutual funds at http://mfcritic.blogspot.com/ and hope to avoid them while doing SIP.

        I have a good friend who swears by investing in direct stocks since he is also mentored by his senior colleague at work. I on the other hand prefer to invest via SIP in mutual funds. Unlike my friend I don’t have interest to do regular detailed research and monitor the markets etc. My friend on the other hand maintains excel sheets which tell him which stocks are a value buy and he waits to buy a lot of them when the markets are down. So pretty much it is up to you whether you play the role of the fund manager for your equity portfolio or pay someone else to do it for you. I do agree that expense ratios are high in Indian mutual funds but as long as the returns are good I don’t mind.

  5. Hi

    Fortunately i had a good if not great Father , who atleast initiated me in PPF from the first year of salary onwards for last 16 yrs .. and now i did the same thing in the first fortnight of my marriage for my wife .and opened for her also so for her 7 yrs .
    Like most of the people does annual vacation ,i also do my annual pilgrimage in the month of April to SBI to put 1.5L in to both our PPF accounts (except this year where i had to postpone to September got due to homeloan initiation) .
    Now we both jointly have about 40L in PPF acount getting about 3L in interest every year w/o any tax ..which will increase continuously .

    Mistake 1: if only for my wife , her father would have advised the same when she joined job .. one of us could have taken a retirement now and our quality of life would have been much better ..

    Yeah PPF will not make us rich but if we have to keep say some money in debt instrument , PPF is one of the best options with EEE treatment .

    At the same time we shud invest into some good stocks so that we can get either some good dividends .
    Although i had got esops with say 3 L investments say 10 yrs back ..but now i am getting 1.5 L in dividend annually which i hope will reach 3 L per year in another 7-8 yrs ..equal to my initial investment .

    Mistake : I should have baught some more companies having track record of giving dividend like TCS etc to


  6. I’d say a lot of those mistakes are common

    – Who among us hasn’t been stupid enough to get into ULIPs at a young age? All of us have an agent in the family and with parents and family urging, it seems like a wise and responsible things to do get into those instruments early in your career. I have less of an excuse than you being a CA ad both me and my wife had a bunch of ULIPs that we ended up getting into

    – Leaving money in Savings accounts is an easy error to make especially if you’re on an assignment abroad. You’re not sure about investing in local instruments. You’re not sure about moving the funds to India and of course you don’t have a lot of time to spare. I think it’s a mistake a lot of us end up making

    – Saving/investing without a plan is also a common error. It’s only lately – especially in India that people are waking up to the concept of Financial Planning for the middle class. When I was younger, a financial planner was either a insurance agent or/and a mutual fund distributor. You got no real advice and there wasn’t a lot of literature available easily.

    I don’t know if you’re making any money of this (I can’t imagine it would be too much) but websites like yours are playing a crucial role in preventing the next generation from making the same mistakes. Let them find their own mistakes to make!

    • Thanks for sharing!
      ya we hope that this blog becomes a community which can provide resources to people to improve their personal finance and achieve FIRE.

      SH made 20 dollars last month:-) just about covers the costs of running the blog

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