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I moved my retirement money out of a stock index fund and into a money market fund several years ago. I thought the market was high and I would jump back in when it was bottoming out. I waited way too long to get back in. Trying to time the market is not a great idea. I’ve also been known to chase yield only to have dividends cut because of poor earnings. The stock then drops because of the poor earnings/dividend. Lesson is not to chase yield without looking at earnings. And the best investment advice is to start investing at an early age and on a regular basis. You can’t win if you aren’t in the ball game.
When I was young I invested too much of what discretionary income I had in rent houses, and not enough in the stock market. I missed out on some very valuable compounding.
When I was young and just starting out with investing, I took way too much advice from friends and family who were chasing the next best thing. I ended up purchasing a few MLPs (master limited partnerships) which I knew nothing about at the time. I lost money and had to wait considerably longer to file my taxes due to the K-1s that come from these types of investments.
I had a few financial hiccups – like buying a little sports car when I was in my early 20s in 2008. It was used, so it wasn’t too expensive, but had I kept my old Camry and just invested the extra money in a stock portfolio, that would be a tidy sum today. Other than that, nothing really comes to mind. I’ve found, however, that whenever I’ve tried to get too cute with my portfolio (i.e. holding more cash or investing in Lending Club notes), it just generally lost out to a diversified and simple mix of index funds. Keep it simple and stick to your plan.
My top two:
1) Spending too much (and consequently not saving enough) when I was in my thirties. I was all about ‘stuff’ back then. I thought having the most up-to-date furnishings, cool electronic ‘toys’ and new cars would make me happy. It didn’t (see mistake number 2). If I would have saved a fraction of the money I spent, my retirement portfolio would likely be significantly larger today.
2) Not fighting to retain my pension when I got divorced. My ex-husband fought for the right to take 1/2 of my state pension when we divorced. I didn’t fight back because I just wanted out of an incredibly unhappy marriage. I realize now I should have tried harder to retain my entire pension, especially since I didn’t receive any portion of his retirement benefits.
I made three big financial mistakes (there are more smaller ones). The biggest blunder was staying out of stock market for first 12+ years of my career. I did save regularly. Unfortunately, my investment knowledge was so limited during that period that I knew nothing outside Bank Savings and CDs. I stayed on the sideline because I mistook it to be the playing ground.