I have an idea that guides almost all my thinking about investing: It is easier and more common to be stupid than smart with your money.
With this idea comes a truth: If you want to get better with money, you should spend more time studying people who have failed than those who have succeeded. That’s where you can find quick, meaningful lessons applicable to your own life. You will make so much more progress learning to avoid failures than you will trying to copy successes.
The good news is that there is no shortage of failures to learn from. The same number of people filed personal bankruptcy in 2010 as earned bachelor’s degrees (1.6 million). Half of Americans can’t come up with $2,000 for an emergency in 30 days. The average investor underperforms the market by more than half.
Here’s what I’ve learned from failures about the easiest ways to ruin your financial life.