Famed investor and businessman Charlie Munger has said one of the best ways to study how to accomplish something is to invert it and look at what not to do. In that spirit, here are seven things you can do to destroy your wealth and guarantee you spend your life in much less affluence than you would have enjoyed.

1. Trade as Frequently as Possible

One of the surest ways to squander your wealth is to spend the maximum amount possible on commissions, fees, spreads, and other expenses.

Each time you buy or sell shares of a stock, you are going to incur some combination of these and it doesn’t take much to do real damage. If you were to pay $10 commissions on buy and sell orders, and bought and sold stocks once a week, your commissions alone would come to $1,040. Even on a portfolio of $100,000, that’s going to seriously dent your results over time. For more information, read Frictional Expenses - The Hidden Investment Tax.

The damage is compounded if you hold assets through a broker, bank, trust, or wealth management department that charges you a fixed percentage of your assets, often 1%, each year. Add to the top of that the fees you pay on your mutual funds and don’t know it, or sales charges on funds that have loads and you have succeeded in actually costing yourself money each year. Don’t believe it can happen? I know first hand of one of the world’s most celebrated wealth management companies that charges clients roughly 1.00% of assets each year, and then parks a great deal of the money into S&P 500 index funds with expense ratios of 1.00% to 1.25% (compared to less than 0.10% for an industry leader such as Vanguard).

To even earn a decent return, you’d have to overcome not only dividend and capital gains taxes, but also the 2.00% to 2.25% fees that hit you up from the very first moment you open an account. If they were to arrange a stake in a hedge fund, many of which charge a so-called 2 and 20 arrangement whereby the client pays 2% of assets per annum plus 20% of profits, and it’s going to be almost entirely mathematically impossible for the investor to beat the broader stock market. It is a mystery to me why the financial press has lauded this company as serving its clients well.

2. Build a Portfolio of Companies with P/E Ratios at Least 3x as High as the S&P 500

To really destroy your wealth, you need to overpay for everything. That means buying the most expensive stocks, at the highest possible prices as measured by the p/e ratio, without any real hope of achieving an earnings yield in excess of the long-term rate of return on U.S. Government bonds. It’s not all bad, though, because you’ll have the temporary enjoyment of owning the incredibly “sexy” stocks that are spoken about constantly by Wall Street and those attending cocktail parties.

3. Put Together Assets with Tons of Correlated Risk

Another great way to hurt yourself and your hopes of financial independence is to build a collection of stocks and other assets that you have convinced yourself is diversified but, in fact, has correlated risk running throughout. Think of someone who has a portfolio made up of a dozen companies – McDonald’s, Wendy’s, Starbucks, IHOP, Yum, Sonic, Ruby Tuesday, Burger King, Panera Bread, California Pizza Kitchen, Chipotle Mexican Grill, and PF Chang. Then, brag to all your friends about how you own enough stocks that even the Great Depression couldn’t take you under.

Obviously, in this case, a rise in commodity prices alone could crush the profits of your holdings. Another example would be someone who has a portfolio filled with stocks of banks and insurance companies – or Internet businesses.

4. Only Buy Stocks You Don’t Understand

Who needs to listen to folks like Warren Buffett as they constantly espouse the virtues of staying within your circle of competence? If your broker or friends say that a stock is going up and you are dedicated to losing your proverbial shorts, buy it. After all, statistically they have a shot at being right one of the many times they throw the dice. It would be downright stupid to buy companies that make boring products like coffee, sealing gaskets, and office supplies when you can buy military grade satellite technology firms with factories in countries that you honestly didn’t even realize existed.

5. Buy Shares with High Accruals – And Lots of Stock Options

When analysts talk about the so-called quality of earnings, they often recommend investors buy shares of companies where the cash flows don’t differ substantially from the reported net income. In these businesses, they may argue, profits come in the form of cold, hard cash. Pshaw! Who needs that? For real wealth destruction, buy only companies where the net income figures diverge wildly from the statement of cash flows. Better yet, look for management with shady reputations and who constantly tweak the rate of depreciation or pension plan assumptions to manage reported results. For the perfect icing on the cake, make sure they are compensated entirely in low-cost stock options and maintain very little ownership in the firm.

6. Pay the Maximum Taxes and Penalties Possible

Nothing can condemn you to poverty faster than massive taxes and Government-imposed penalties. The quickest way to bring these on yourself is to get backed into a fiscal corner so you have to tap your 401k or Traditional IRA, paying the income taxes that would have been due in the first place, plus an additional 10% penalty on top of that. This method is particularly effective for wealth destruction because you could decimate a six or seven figure portfolio in a matter of seconds simply by authorizing the withdrawal.

7. Maximize Non-Deductible Debt

The worst kind of debt – or if you’re into wealth destruction, one might say the best kind – is that which is not tax-deductible and carries an enormously high interest rate. Chief among these is credit card debt, which can routinely run as high as twenty or thirty percent. If you really want to wipe out your assets, there’s no better way to do it than to ring up the balances on those plastic cards, especially with items that quickly depreciate such as cheap furniture and electronics.