Our Investing Story

Don’t make these same mistakes!

I give myself grace for these mistakes, as I extend this same grace to those I work with!

Hey, who educated us on sound financial decisions and habits? School? Rarely. Parents? Rarely. And worse, some households modeled something very unhealthy. And the world entices, wanting consumers to create even worse habits.

So here’s my story on investing, and the mistakes my husband and I made along the way.

(The one thing we did do right—contribute! It started with a new 401k plan offering with my husband’s employer. We jumped on it, even though we couldn’t contribute a whole lot at the time. And we slowly increased those contributions to the max, while also getting the employer match.)

Here they are (our uh-oh’s)!

1 - Return Chasing

Okay, so we were contributing. But where do we invest those contributions? Hmm, let’s pick a mutual fund that performed well last year! Mistake! You’re overpaying to get into this fund, and if it performed well last year, it most likely will not perform as well THIS year, or next. Yup, it had already seen its “day in the sun” and so its gains (at best) were pathetic, even while the broad stock market was doing well on average.

2 - No Diversification

That fund we picked was the ONLY fund we were invested in. Anyone ever hear of the word “diversification”? 🙄

3 - Wrong Objective

I’m embarrassed to say this one and only fund was a Dividend Income Fund. What??? Wrong objective! We should have been saving for the long-term (and thought we were), but this fund is best for retirees looking for a steady income stream. Not us, but who knew?

4 - Expensive

After a few years of dismal returns, we finally diversified! We spread the dollars into a number of different “actively managed” growth funds. But it was many years later that I learned about their underlying costs. Because they were actively managed, their expense ratios were high. And don’t tell me those expenses don’t matter. You can see it when you plug the numbers into a compound interest calculator.

Ah, and had we learned yet not to chase returns? Nope. We chose those funds based on past performance (it’s so tempting)! AND, those numbers we were chasing weren’t reflecting the underlying expenses.

5 - Swing Trading

Can you believe I traded on my own? It was fun! BUT…dangerous. No, I didn’t lose a bunch of money, but I still caution you. Fortunately, I only traded a small amount of our assets that were in IRA’s (outside our employer’s plan). It took a lot of time and attention, and I was never able to do better than the general market. And to be honest, I probably underperformed.

What I learned.

After all this, we finally learned to invest passively.

We chose mutual funds that were passively managed (e.g. index funds), low-cost, and diversified. And held onto them for the long haul. Even with the ups and downs of the market, these have performed very well on average, and have been almost hands-off.

THIS is why I say you can manage your investments on your own—with just a little education and a simple approach.

Skip the learning curve.

Sign up for our Retire Well 6-week program.

Avoid these mistakes.
Invest simply.
Invest cost-effectively.
GET ON WITH YOUR LIFE!

Retire Well.

Learn more in our Retire Well group coaching program. Starts 9/3 and runs for 6 weeks. I’d love to see you there!