My Mistakes

My challenge to you: List your top financial mistakes. Not sure you want to invite the ridicule of others? To make everybody a little more comfortable, I’ll go first. Here are my top six:

• When I started investing in the late 1980s and early 1990s, I bought individual stocks and actively managed mutual funds. Admittedly, I went this route because it allowed this cash-strapped investor to get started in the financial markets with a few hundred dollars, as I detailed in an earlier Forum post. Still, if I’d been a little more patient, I could soon have amassed the $3,000 needed to buy Vanguard Group’s S&P 500-index fund, which would have been far more sensible.
• Later, with an $8,000 gift from my father, I invested $2,000 each in four individual stocks. It was the late 1990s and I was no doubt imbued with a little bull market fever. I wasn’t buying crazy dot-com stocks, though one was viewed as a backdoor internet play and, sure enough, it crashed and burned. By the time I hit “sell,” I’d lost 80% of my initial investment. Fortunately, the other three stocks fared moderately well. This was the end of my individual stock days, except for modest holdings of the shares of two employers.
• Nervous that I wouldn’t qualify for a mortgage, I bought a starter home in 1992 that was, in retrospect, notably less expensive than I could afford. I lived in that house for almost two decades, allowing me to save great gobs of money. Trouble is, I never especially liked the house, even after spending significant sums to fix it up.
• Again out of nervousness, when applying for the mortgage to buy that first house, I agreed to pay the private mortgage insurance as a single upfront sum, with the amount involved added to the mortgage. The mortgage broker insisted that it was the better deal—I soon figured out it wasn’t—but I didn’t want to quibble, fearing it might imperil the closing on the house.
• When I bought an apartment in a New York co-op building in 2014, I never questioned the size of the monthly maintenance payment, which was high, though not outrageous by New York standards. That was a mistake. Because the apartment I bought was actually two apartments that had been combined more than half a century earlier, my maintenance was much higher than that of similar-sized apartments in the building, and that proved to be an obstacle when I went to sell.
• I spent a few years working on a technology startup. After countless meetings, I had little faith we were developing anything viable, and yet I still invested money to keep the project going. It wasn’t a huge sum—but it still stings when I think about it.

Were any of these mistakes financially devastating? Fortunately, not. Did I learn something from my mistakes? Yes. Still, I could have done without the tuition bills.