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How To Lose Money in 2016

A sad investing clown, yesterday.

HEY YOU!

Do you have too much money?

Are you feeling guilty about rising inequality – and are you brave enough to personally do something about it?

Perhaps you’re fed up with your friends entertaining each other with stories about how they lost the lot on their stock picks or were ripped-off by a pension provider – and now you see that your sensible investing mindset is good for your wallet but bad for your pub cred?

Or maybe you just watched Brewster’s Millions too many times as a kid?

Well fear not!

A brand new year is almost upon us, and with it the chance to turn over a new leaf to ensure you don’t make a single bright penny when you could be chucking one away instead!

If you want to lose money as an investor, then this is the guide for you.

These Seven Top Tips to Self-Destructing Your Wealth in 2016 will have you turned away by the bouncers at the 1% Club faster than you can say: “World’s Worst Investment Strategy.”

Get ready to lose the lot!

1. Sign up to some bearish investing websites

Good investing starts with a long-term businesslike mindset, so to really invest badly, it’s vital you start rotting your thinking without delay.

Where better to begin than by overdosing on some of the doom and gloom newsletters that have been predicting Financial Armageddon since, well, the start of the last bull market?

They’ll have you swapping your carefully chosen funds and shares for baked beans and survival kits in no time.

Ideally find one that offers occasional tips on Russian gold miners, Panamanian oil explorers and the like.

That way you’ll get twice the bang for your buck.

2. Buy shares tipped by crazy-sounding people on social media

Once you’ve got an appropriately short-term trader-orientated pseudo-investing mentality going on, you’re ready to start pumping away your money on duffers.

Sure, you could swap your cheap and effective trackers for expensive actively-managed funds.

But now upfront commission has been done away with, high cost active funds are more for gentle folk who only want to do relatively badly when investing.

We’re trying to really crash and burn here!

Most fund managers are smart, not stupid. That’s why they find it so hard to beat each other and their index – and it’s why very few proper funds actually blow-up.

If you’re lucky you might have access to some sort of hard-charging 2/20% style hedge fund pursuing an esoteric investing strategy that’s ripe for a fall – perhaps emerging market or energy related high yield debt in today’s climate – but most of us would-be losers aren’t so fortunate.

No, for us the old way remains the best way to lose money – churning an ever-changing concentrated portfolio of loss-making story stocks that are kept alive by little more than a hope and a prayer.

A great way to begin is to buy shares tipped by a stranger you’ve never heard of called something like UltraBu11ish!Penguin443.

You don’t know anyone named like that?

Don’t worry – these people are a doddle to find on Twitter or on other social media platforms or discussion boards.

If you’re really lucky, he or she will claim inside information, or possibly reveal the existence of a ‘big seller’ who is about to stop dumping the shares, clearing the ‘overhang’ and enabling a rally.

(Fear not – the rally will never materialize and you’ll see your shares comfortably dwindle away towards nothing as you wait).

Alternatively, the tipster’s long experience of investing in the stock market whenever the High Street betting shops have closed might give them insights into the wily ways of market makers, enabling them to spot when these dastardly City folk are ‘shaking trees’.

Note: You don’t have to know what on earth ‘shaking trees’ is all about.

To lose money you just need to slavishly buy whatever they tip, sit back, and watch your portfolio plummet in a matter of days.

Easy!

3. Trade as much as possible

Studies have shown that those who trade the least tend to have the best performing portfolios.

So to lose money as quickly as possible, it makes sense to constantly churn your shares like it’s illegal to actually own the things.

Mobile phones have made this easier than ever. Perhaps you could do a bit of surreptitious trading at work, whenever you visit the bathroom or during particularly boring presentations?

Also, try to sell low and buy high.

This will maximise the speed at which you lose money.

4. Ignore trading costs

One reason turning over your portfolio is expensive is because trading costs money.

Sure, you can trade frustratingly cheaply with online brokers nowadays, but if you can wrack up 5-10 trades a day then you will soon offset their stupidly low charges.

Remember, it’s not just the multiple dealing fees that will be losing you money.

You’ll also pay the spread between the buying and selling price on the shares, and Stamp Duty is usually payable at 0.5% a pop when you buy a share in the UK, too.

A truly madcap day-trading approach is ideal, as it brings together the power of short-term myopic emotional investing, your compounded trading costs, and all that awful advice you’re now getting from your new friends on Twitter.

5. Borrow money to invest

It’s possible that even after following these tips you’re still not losing money at a rate that makes you comfortable shopping exclusively for yellow-stickered Best Before bargains at a grocer that’s being closed down for health and safety reasons.

So if you’re still suffering from excessive wealth – or you just want to get poorer faster – know that borrowing to invest is an ideal way to accelerate your plans.

Normally when you buy a share – even the sort of awful pump-and-dump penny stocks you’ll be specializing in – the most you can lose is all the money you put in.

Sounds a lot, sure. But losing it all can take months or even years.

However if you borrow and then buy with the proceeds, you can actually lose more money than you have and end up in debt!

This will help you lose all your money far faster than you might have thought possible before.

What’s more, punting on penny stocks with borrowed money raises the chances that you’ll make terrible short-term decisions in a panic, adding fuel to the self-immolating fire.

And if you’re really lucky you could end up trying to dig yourself out of the red with a series of ludicrous long shots that all go wrong!

Now the bad news – your bank manager is unlikely to actually give you any money to fritter away on the stock market.

Instead you might have to get creative with credit cards and other forms of misappropriated and hugely expensive debt.

Making ginormous spreadbets you don’t understand is another easy way to magnify how much you can lose with your ill-informed wagers.

Finally, do explore so-called ‘leveraged ETFs’, which multiply the daily ups and downs of the index that they track.

Best of all are leveraged ‘short’ ETFs, where the idea is you make money if the market which they follow goes down.

The way short ETFs are structured, you can lose money if you hold them for a few days or weeks – even if the underlying market actually does fall!

Genius.

If you don’t understand why this is the case (and very few people do) then they should be an ideal addition to your arsenal of money losing hand grenades.

6. Avoid ISAs and pension wrappers

If you follow all these tips, the chances of you making any money from investing in 2016 are very slim indeed.

However even a loser can get lucky once.

Perhaps somebody nefariously ramps one of your penny stocks while you’re spreadbetting in the men’s room – and now you’re faced with a massive winner on your hands!

Well, one way to ensure you keep as little of your capital gains as possible is to always invest outside of tax efficient ISAs and pensions.

This way you could be liable for capital gains tax when you sell – and if you receive any dividend income then you may well have to pay tax on that, too.

By shunning ISAs and pensions you stand the best chance of giving up a chunk of any profits that you should accidentally happen to make.

7. For professionals only: Fraudsters and boiler rooms

If you’re a mature professional who has enjoyed a lot of success in life, you probably feel that you’ve earned the right to avoid all this rigmarole when you want something done fast.

Well, the good news is you won’t necessarily have to get your hands dirty to be relieved of all your hard-earned wealth.

No, there’s an entire subterranean industry of hucksters, con men, scam artists and other criminals who just can’t wait to tell you about an investment that’s right for you.

An investment that will earn you at least 22% a year, and that is extremely timely (in fact, you might only have until next Tuesday to instruct your bank to wire them £39,232).

At this point though you and I must part ways.

You see, being a humble sort I’ve never been fortunate enough to be called by somebody who only has my best intentions at heart, and who for some reason wants me to get the guaranteed rock solid gains that they could otherwise enjoy for themselves.

However I do know from numerous consumer watchdog programs, regulatory warnings, biographies of gangsters and so forth that these things invariably end in tears.

So go ahead and ‘invest’ in that once in a lifetime opportunity – in the sure and certain knowledge that you’ll in no way derail your plans to end up far poorer at the end of 2016 than you began.

As they never said on Hill Street Blues

Let’s not be careful out there!

Note: If you’re a boring old traditionalist who wants to grow their wealth over the long-term rather than blow up in a blaze of glory, simply do the opposite of everything in this article to hugely improve your returns. But really, where’s the fun in that? You must be a hoot at parties!

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{ 16 comments… add one }
  • 1 OgreNoseGrid December 18, 2015, 7:55 am

    Tactics are useful of course but it appears to me that Monevator is overlooking strategy. With foresight, all you need to do is:

    -Spend more than you earn
    -Borrow to make up the difference
    -Spend the money on things with no return or asset value
    -Hint: If it’s heavily advertised, that must mean it’s a good buy for this strategy!

    That’s it: the basics are simple and you can avoid all that later work dealing with inconvenient accumulated savings – just by not having any! Now – don’t just sit there, dash out and spent your money on trinkets and consumer twaddle, in time for Christmas!

  • 2 London Rob December 18, 2015, 9:39 am

    Fantastic post – that made my Friday morning and I did chuckle. I do object to your reference of Russian Gold Miners however, as my little Russian Gold Miner has done me ok so far 😉

    Thanks again for making my Friday morning

    London Rob

  • 3 Marco December 18, 2015, 9:47 am

    My gold mining fund went up 250% then crashed by almost 90%

  • 4 Survivor December 18, 2015, 12:03 pm

    What about the convenience factor ? – because you’re worth it ….. I added that by out sourcing my Rapid Impoverishment MissionING to a specialist personal financial consultant !

    The most efficient way was just getting married; I was bust in no time.

    Now my ex-house has gone up ~ £100K in the last 5 years alone – money that would have burdened my pocket & weighed me down.

  • 5 Matt Smith December 18, 2015, 12:14 pm

    Marco – that means you’re still up 160%, right? Right?

  • 6 Investing Tortoise December 18, 2015, 12:21 pm

    Thanks, that sure made me smile!

    You even managed to get a mention for Hill Street Blues in too – cop shows ain’t what they used to be.

  • 7 Neverland December 18, 2015, 12:25 pm

    I think you are being very rude about Moneyweek in 1

  • 8 Felice_Pazzo December 19, 2015, 12:29 am

    My favourite is number 5. Top tip – ditch leveraged shares for leveraged property, and your average bank will gladly lend to you at ridiculous multiples so you can gamble away your present, and your future, on double zero 😀

  • 9 Fernando December 19, 2015, 9:58 am

    Neverland: i think moneyweek is pretty balanced when you compare to sites such as the perma bear fanatics at zero hedge. The thing about moneyweek is that you have the owner trying to fill even further his bank account by spreading fear (always on the last pages of the mag)

  • 10 StellaR December 19, 2015, 1:54 pm

    Fantastic post, TI – really made me smile, and #1 is a great antidote to all those capital & conflict emails which sap my optimism on a daily basis! I suppose fear sells more than positivity, human nature being what it is.

  • 11 grey gym sock December 19, 2015, 6:57 pm

    i’d add that you definitely shouldn’t measure the performance of your share portfolio against an index. this is irrelevant, because the real value of a share is the target price which P3ngu1nBu11(S#1++3r) mentioned – perhaps 5X or 10X what you paid – and not the current “market” price – perhaps half what you paid. i put “market” in quotes because of course it’s being manipulated. you haven’t lost money until you’ve sold!

    and that when you do realize a loss, this should be viewed as a positive thing, because it will save you capital gains tax when your remaining shares come good and give you huge capital gains.

  • 12 John December 20, 2015, 1:37 pm

    @matt depending how he calculated the percentages he could be down overall by quite a lot!

    If his fund went up 250%, call the total before the rise £100, so now £350.

    Now the £350 crashes by 90% leaving 10%, £35.

    Unlucky Marco! Doing well according to this post though!

  • 13 Marco December 20, 2015, 3:18 pm

    The gold mining fund gave up all its gains and then about 70% of its starting amount. I am an all world index investor these days

  • 14 Financial Samurai December 20, 2015, 11:25 pm

    How about buying London property!?

  • 15 Jim Wang December 22, 2015, 6:40 pm

    Want to get really crazy? Short a penny stock based on a tip from social media!

  • 16 Mr. Groovy December 30, 2015, 7:50 pm

    Don’t know if this will work across the pond, but it’s a great way to destroy wealth in the States. Dig up some Carleton Sheets CDs and start flipping houses. Great post. Thanks for reminding us what not to do.

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