[USER]

What can someone in my situation do? I took an extremely large financial loss gambling on stock options during 2020/2021(this may get some angry faces on this post but it was for -97k). I’ve made it all back (little over 200k) via crypto. I now just have my money in a CD as I am not over the loss mentally and I will NOT gamble again EVER!

I do know some risk is required to become FIRE via safe investments(still entail small risk), question is.. has anyone dealt with a large loss? How did they recover mentally?

I thought making the money back would solve my issue but I feel traumatized still.

[Danielle]

I lost $125k that I held in stablecoin through BlockFi when they went bankrupt. That was a huge sum, basically all my cash (the rest of my investments are in some RE). That was just under a year ago.

When it happened, you’d think I would have freaked out, but I actually had the opposite reaction. I was grateful. Grateful that I had the cash to lose. Grateful that I didn’t lose my cash flowing real estate, grateful for my health, for my home, etc.

I also learned an important lesson, namely to open my tight fist and spend money. Money does no good sitting in a brokerage account earning interest if you’re living a life of extreme frugality.

I went out and bought the Vitamix I’d wanted for 10 years, contributed $600 to a friend’s GoFundMe, and set up a monthly $30 donation to Save the Elephants.

Now, whenever I’m deciding whether to leave a $5 vs $6 tip, or whether to buy the organic basket of blueberries for $10, I remind myself what a drop in the bucket those things are compared to what I hoarded then lost with BlockFi, and how short life is. Tip generously, buy organic, live life now. It’s all we’ve got.

Book recommendation: Michael Singer, The Surrender Experiment

[KC Kline]

Many of us have paid a “stupid tax” at some point to learn a valuable lesson. The key going forward is to learn (from others mistakes) and not repeat.

[Mayuresh]

This post should be titled ” how not to FIRE”.

[Aaron]

I’m not sure how long you plan to keep your money in a CD, but over the long term this is just as risky, if not riskier, than trading options.

Before investing anything else, read a couple of books about long term investing, learn the short term and long term risks of stocks and bonds, pick an asset allocation you’re comfortable with and go all in and stick with it.

[Damon]

What are you mentally recovering from exactly? That’s like me betting on a 100 to 1 underdog then being shocked if he loses.

You made risky moves on options and you lost, and you made risky moves on crypto and you won. You understand these are two sides of the same coin?

When the entire market takes a nosedive it’s understandable that people get troubled because that was supposed to be relatively safe bet long term.

In your instance of options trading and crypto, everyone knows it’s a high risk investment so the “shock” of losing that bet seems kinda far fetched.

Maybe what you learned was something about your level of risk tolerance, which is that you don’t like high risk investments.

[John]

So, you basically bet on red (gambled on stocks) and loss and then doubled down on black (crypto) to get back into positive territory. First off, congrats on gambling your way out of a gambling loss and knowing when to quit and seek help.

Now it’s time to invest. Without more details it’s hard to suggest what YOU should do. It depends on your long term plan. I’m going to guess you don’t have one.

Step 1: Make a long term plan. Set financial goals for every 5 year increments between now and age 100.

Step 2: Estimate what you’ll need in retirement, for bridge money, etc. work backwards to see how much you’ll need to save.

Step 3: Set up automatic deductions to help you reach your yearly savings goals. Perhaps this is from your pay and/or you supplement maxing out your 401k and ROTH with your newly found $200k (let’s say $20k/yr for the next 10 years). This would be a way of dollar cost averaging into the market.

Step 4: Commit to NEVER touching your retirement savings until retirement.

Step 5: AFTER you max out everything possible, give yourself some crumbs. Let’s say maybe 1-3% of your income to use for speculative investments or gambling. This should be all you use to satisfy your need for super high risk. Maybe it’s crypto, maybe it’s a trip to Las Vegas. Just make sure the amount you gamble is low. Low enough to not mind losing it.

Depending on your plan, keeping some money in a safe investment (like a CD) is OK. It has to be a piece of YOUR retirement plan though. Don’t miss out on higher returns because you’re paralyzed to invest.

[Author]

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