The butterfly effect of your financial moves on your future
The butterfly effect of your financial moves on your future

What is the butterfly effect of your financial moves on your future?

The ‘butterfly effect’ refers to the cumulative effect of your little decisions on your future. The origin of this metaphor goes back to chaos theory, which is an area of study that focuses on how complicated things operate.

In this particular context, the butterfly effect means how a series of small decisions can make a huge impact on your life.

The butterfly principle decoded

It’s said that when a butterfly flaps its wings in New Mexico at the right time and place, it can trigger a hurricane in China.

It will take some time to trigger a Hurricane but there is a true connection between the 2 incidents.

The hurricane wouldn’t have happened if butterfly didn’t flap its wings at the right time.

Everything is connected as per the theory.

Small changes can lead to drastic changes and results in the long run.

Butter effect of your decisions on your financial life

The butterfly effect is also applicable to your financial life. Just look back into your past for a moment. You’ll realize that you have made several financial decisions in the past that have made a huge impact on your life.

In short, those decisions have shaped your present financial life. You’ll understand that a few small but crucial decisions have made a tremendous impact on your life.

You may regret 2-3 decisions and applaud the rest. But even if you have made bad decisions in your life, don’t rebuke yourself. Consider those mistakes as your lessons. Those mistakes helped you learn a lot.

If you learn from those mistakes and don’t repeat them in the future, then you can create a beautiful life gradually.

Today, I’m going to share my experience on how a few financial decisions affected my family’s life and pushed us into an ocean of debt.

Transferring accounts to a new brokerage firm

My dad has been investing in stocks for the last 30 years. Whenever he used to earn extra dollars, he invested it in the stock market. It became almost like an addiction for him. He bought blue-chip shares and created a huge portfolio.

Back then, there was no Internet or Google. Dad used to check out market reports, analyze market trends, watch TV shows on stock investments, and so on. Sometimes, he incurred a loss but then again, he recovered that money through some other stocks. All in all, he was quite satisfied with stock investments.

My dad is a workaholic. After retirement, he decided to engage himself in stock trading. Once he made the decision, he transferred his stocks to a new brokerage firm since it was nearby.

Every day, he used to coordinate with the broking house and trade regularly. Initially, everything was good and he was satisfied.

However, after a few weeks, the brokerage firm started selling his stocks without taking his consent. Dad started objecting over the phone, but they told him that everything would be fine.

Investing more money to recover the loss

The brokerage house made promises after promises, and dad believed them whole-heartedly. The brokerage gave him a few monthly payments initially. Thereafter, they started incurring huge losses.

They sold all his bluechip stocks and bought shares of financially weak companies. Everything was done without dad’s consent. When he raised objections, the brokerage firm promised to recover the entire loss within a few months.

They asked dad to invest more money for buying stocks of bluechip companies and investing in the commodity market.

Dad was trapped. He had no recourse. He had already lost all his stocks and wanted to recover his money as soon as possible.

Dad invested another $4,000 in the stock market. He sincerely hoped that the brokerage firm would keep their promise this time. The brokerage firm showed that they were working diligently on his portfolio, but that was not the case. The firm incurred a huge loss yet again and my dad’s ledger balance became zero.

The butterfly effect

After everything was lost, dad was devastated. He lost around $9,000, which is a huge amount. Had I incurred this loss, I would have lost my mind. Dad couldn’t sleep properly for many days.

Then, he started analyzing all his decisions. He realized that everything happened due to a few small decisions in the past. Maybe, this fiasco wouldn’t have happened if dad did stock trading on his own.

Maybe the situation would have been different if he didn’t transfer his stocks to the new brokerage house. Maybe, he would have been a happier person if he didn’t invest more money.

On the hindsight, everything was not bad. He made a few good decisions also. Initially, the total value of stocks was $16,000. When the brokerage house was not listening to him, he sold his few shared and transferred $7000 to his savings account.

He invested that money in government bonds and treasury bonds. It’s true that dad didn’t make a huge profit. But at least, his money was safe and secured. He didn’t incur a loss.

Dad had to take out a personal loan after incurring such a huge loss. He planned to pay it off with the profits earned from the stock market. But things didn’t turn out the way he expected.

Without wasting any more time, he approached a reputed debt law firm to pay off his loan. Fortunately, the debt firm was good and helpful. They understood his financial situation and gave him several options to pay off debts.

The debt law firm suggested him to enroll in a debt settlement program. They explained that entire program to him. They give him all the papers so that there is no scope for fraud. Dad was skeptical because he has already been cheated. He read the terms and conditions of the program, again and again, to avoid losing more money.

Fortunately, the debt law firm turned out to be good. They negotiated with dad’s creditors and reduced the payoff amount by more than 40%. Dad was slightly relieved. Every penny was important for him during that time.

The debt law firm helped dad in more than one way. The attorney who was dealing with my dad’s case became his friend eventually. The attorney was a good guy. After hearing dad’s financial story, he suggested him a few ways to recover his money from the brokerage firm.

At the end of the day, dad was cheated. The attorney told him several laws to teach a lesson to the law firm.

Based on the attorney’s advice, dad gathered all the documents and registered a formal complaint against the brokerage firm. It was not easy. He had to send a lot of emails and search his files to collect the documents.

The brokerage firm also reverted back by claiming that all the transactions were done with my father’s consent. Dad objected and asked them to show a valid proof. They are yet to show that proof. They just played a voice recording where dad gave consent to sell one share. However, they didn’t play the voice recording of all the transactions.

Dad has asked them to play the voice recording of all the transactions so that he can prove his innocence.

Even then I would say that a small decision to hire a debt law firm helped dad to fight for his rights and lost money. If everything goes well, then perhaps dad would be able to recover his entire money.

The butterfly effect of financial decisions in my dad’s case is not too bad or too good. He has lost a lot of money due to some poor financial decisions. But this is also true that he has made some good decisions. The decision to invest in government bonds and securities has been really great.

After looking at my dad’s experience, I have decided not to invest in the stock market. It’s a big ‘no’ for me. I would rather invest in stocks and bonds than in the stock market.

I would rather opt for higher medical insurance coverage or build my nest-egg instead of investing in the volatile stock market. I know many people won’t agree with me.

After all, the stock market can give a good return on your money. It can make you a millionaire when you play all the cards right. But on the downside, it can also drain my savings.


All in all, I can’t say that the butterfly effect is disastrous. It can be strangely comforting. Barring a few catastrophic decisions, you can turn any bad decision to a positive one. Yes, it will take some time and you need to make a conscious effort for that.

If you think logically, you’ll realize one thing. Even the decisions that lead to catastrophic results are not that bad provided you learned from your mistakes.

Mistakes help you to learn and evolve. They help you to become a smarter version of yourself.

So learn from those mistakes and make sure you don’t repeat them in the future.

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About Stacy Miller

Stacy B Miller is associated with a Cal Bar registered debt law firm as a content editor. She writes articles on various types of financial topics to spread awareness amongst consumers regarding their financial rights and privileges.

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