My Financial Story – Chapter 3 – University

This is the third chapter in my financial story series. In the previous chapter I was a high school student with millions in my bank. Here I’ll show you how I survived through University years without piles of debts. Next chapter will be about my first steps as researcher.

In 1996 my monthly allowance raised to 200.000 Lira. Now that I think about it, I find ridiculous that my parents continued giving me a monthly allowance. But that was how things worked in Italy in late 90s.

I decided to get a Master Degree in Software Engineering. My father was clear on this: university costs were on me. Universities in Italy are essentially free. We can get a (not high quality though) passe-partout that enables all kind of career for free. Yes, ok, taxes… but as a student I think every Italian student should only be thankful for what we are getting without having to bury ourselves below tons of debts. Close to zero tuition costs, but still people complain about high fares.

A full year costed something around 1.000.000 Lira (500 Euro) with discounts based on family income (the poorer you are, the less you pay) and, but only in my first and second year, based on performance. If you keep a high average score on your exams you win next year free. The target was not even that high. For the first 2 years I was able to achieve it so I didn’t pay 2 years of University tuition costs. Then they shot down this opportunity and I had to pay my million per year. Italy is not the land of meritocracy. Being above average is something you should feel guilty about.

I continued with private math lessons (I actually made the business grow a little) and I found a part time job as tech assistant at one of the many computer laboratory. It paid poorly but it was fun. I had access at high speed internet! Internet was not a real thing in late 90s, there were nothing to do there. I, as anyone at that time, used it to download music on Napster. Yes, at the lab. I also supported practical programming lessons and it was super fun. I forgot to mention that I started coding at age 9, on a Commodore64, and never stopped until… well… it’s my daily job. The lab was big and it was mainly used for programming lessons for big crowds. Only first or second years courses had such big crowds. First and second year courses of every faculty in the campus used that lab. I got to attend Pascal language coding sessions for Lawyers, Introductory C++ Programming for Economists, Java for dummies for Architects. It was extremely fun.

For the record, here the all time high score! 10 Millions!
For the record, here the all time high score! 10 Millions!

Anyway, earnings was always more than spending. I decided I want freedom from my dad, so I opened a true bank account with special conditions for students and started moving my money over there. I planted the first seed toward one of the biggest financial mistakes I’ve done insofar.

University years flowed financially ok till year 2000. I structured my private lessons business, working with with 4-5 kids in parallel and dreaming about making it a full time job. Did the math: I can work for 8 hours a day on 10.000 Lira per hour (well, I could raise this factor a bit). It’s 80.000 per day = 1.600.000 a month (800 Euro, a good salary at that time) if I work 20 days per month! Expenses could be close to zero for this job (if the kids come at my place). Forgot to mention that paying income taxes on private lessons were not very popular at that time, and it still is not.

I attended University in Rome, in my hometown. Rome Universities are still popular among south Italians. There were (and I guess there still is) a huge community of resident students, living in shared apartments (no, we have almost no dedicated campus or housing), studying in libraries, attending events, hanging out together, partying,… I totally missed that side of the college years. I kinda regret it a little bit. I used to go to college like it were a high school: attend lessons, coming home, studying, prepare exams, getting high votes, repeat. No true academic life. No deep connections. No secret projects in a garage. No startup dreamed. If I could go back in time, I’ll be more present in the student world, trying to find professional connections and start true profitable projects. I think not having exploited these academic years, not having pushed a little bit outside my comfort zone, prevented me from ramping up early in my career. Unlike MrMoneyMustache, Livingafi, MrRoG, Jacob (ERE) and few others, who were able to boost their income at a very young age, I had to wait a lot – till age 35 – before earning 6 digits and dreaming about retirement.

Year 2000 came and my bank convinced me to put some money on the stock market, via an obscure same-bank managed Italian stock-based fund that had zero apparent costs (all fees were embedded in the fund value). How many mistakes can you recognize in this? Let’s run though them:

  • I had no idea what were my short and long term financial goals.
  • I had no idea how long I was going to hold the positions.
  • I was investing on something that I don’t understand (never invested in stocks before).
  • Financial adviser was making money on my subscription, so my wealth was not his best interest.
  • Bank, adviser and fund were the same entity.
  • It was an actively managed fund.
  • It had obscure costs. tracking the Mibtel index (Italian main stock index) and the fund performance the fund was always behind. Everyday.
  • We are talking about Italian stocks… Italian economy
  • It was year 2000
  • I put all my savings there

Long story short: I invested 16 Millions on the fund and after 2 years of continuously losing money I sold my positions for 8 Millions, 2 years later, just before the bull market years. I bought very high and sold very low with 50% loss. I didn’t sleep very well for a while. Years of earnings thrashed. Due to that experience I built a kind of repulsion toward stocks and the market in general. For the following 13 years I only invested in low revenue CDs or Postal Bonds.

I don’t have economic tracks of some of the years between 2000 and 2003, but a graph of my Net Worth between 1996 and 2003 looks like this:

dotcom

Putting all together since 1991:

alltogether

Btw, it took time to digest the stupid investment I’ve done, but looking things in perspective it didn’t take too much. During my Master Thesis development (2002 – 2003) I had three parallel jobs: private lessons, lab and research assistant (and lecturer) for my supervisor, which paid very well. I was earning more than 1500 euro per month (yes, true Euro, finally!). Apparently I was good with students of any age and I loved doing applied research on robotics so… why not accept my supervisors offer of becoming a PhD student and join the robotic lab over there? A dream job… (poor Mr.RIP, what a reckless dumb!)

Follow me to the next chapter