I’ve made a lot of investing mistakes in my 20’s. I’m now in my 30’s and I feel so much wiser than when I was in my 20’s. When I used to read Cosmo magazine, I remember reading that women loved being in their 30’s. It’s so true: I love being in my 30’s! You know who you are and don’t put up with as much crap. You don’t try and please others as much. In my 30’s, I’ve got some money, I am heading towards financial independence (equipped with the right recipe of course), and I have the wisdom from investing experience in my 20’s.
Hindsight in 20/20 and there are a few things that would make my 30’s even better…if I did things differently in my 20’s. Nevertheless, I wouldn’t trade my experiences because they helped me appreciate what I am doing now. Maybe in my 40’s I’ll be thinking differently again, who knows!
These investing mistakes have cost me THOUSANDS, maybe even $10,000’s and cost me much more compared to the simple money regrets I had about buying a motorbike and a pair of boots.
not asset allocating
I heard about asset allocation and how important it is, and though I did it in a portion of my investment portfolio, I didn’t look at asset allocation as a whole. The first time I calculated my asset allocation, I think I was 42% Canadian stocks. The world isn’t 42% Canada from what I understand 🙂 I was missing out on a lot of great companies, a lot of great growth internationally and in the US. Now I check my asset allocation on a quarterly basis and my Canadian asset allocation is now 28%, which is a huge improvement from before.
focusing on dividend income rather than growth
Tying to the above (not asset allocating), I was so excited about the idea of passive income that I started buying dividend income producing stocks left, right, and centre. I had over a $6000 annual dividend yield but my portfolio lagged. I had a HUGE stake in preferred shares when the interest rates were going down (and hence had to sell my preferred shares for a loss to balance my portfolio). It wasn’t keeping up with the S&P 500 or the TSX or even close to it. Instead of focusing on growth of my portfolio, I focused a bit too early on income. I should have focused on making my portfolio bigger, and then switch to dividend and passive income investing after.
I should have reviewed these dividend investing books before focusing just on income instead of dividend growth.
listening to jim cramer and other hot stock tips
I used to watch Jim Cramer on his Mad Money show on BNN and loved his hot stock tips. I bought Coach (NYSE: COH) and Luxottica (LUX) and ATVI (Activision Blizzard) from his recommendations. I clearly did no research of my own and just bought them because of his recommendations. I don’t think I made money from any of them and sold when I became fearful. Luxottica manufactures glasses and sunglasses (most of the ‘name brand’ glasses are made by Luxottica- Tiffany and Co., Gucci, Burberry etc.) and Activision Blizzard made World of Warcraft and Call of Duty games.
I also bought stocks that my ex-boyfriend recommended, companies that he was working for or involved in. He would tell me how the company is doing and say his bosses were buying stocks, and I thought maybe I was privy to some insider trading (haha how ridiculous was I?). I have Suncor (SU.TO) because of this ‘hot stock tip’ and I bought it at the PEAK, now it’s about 2/3 of what I bought it for and I have sold most of my shares (at a loss of course) except there are a few just sitting there reminding me of my failure.
I wasn’t being a very good Canadian personal finance blogger.
being fearful when others were fearful
I used to set stop losses set on my dividend paying stocks, I set the stop losses to 20% if I remember correctly. Some great stocks were sold and capital losses were triggered when I should have just actually bought more instead of sell. Now I don’t use any stop losses because I know that if things go down (and they will) I will just be buying more because I know these are quality dividend paying companies.
Some of the companies in the ‘stop-loss’ and ‘taking profits too early’ graveyard include:
- Bell (BCE.TO)– I remember I was traveling in Nepal and the Internet reception wasn’t very good. I remember checking my portfolio from an Internet cafe and prior to leaving on my trip I set stop losses. I saw that my Bell shares sold but didn’t do anything about them, thinking I could buy them again later when they dipped further. They didn’t dip further. The solace I have from my Telcom Tizzy is now I own Telus shares instead lol (which makes a bit more sense since Telus has been my mobility provider for eons).
- Exchange Income Corporation (EIF.TO)– I loved Exchange Income Fund, it is an aviation and manufacturing company. I loved it because it had a huge dividend yield. A stop loss triggered a sell and my juicy monthly yields were no more.
- Visa (V: NYSE)- I bought this when the IPO came out. I remember I bought it for around $64 and sold it for around $88. I bought it at around the same time as my mom. She’s a buy and hold forever type of person and she still has Visa in her investment portfolio. She still smiles and asks me how Visa is doing knowing full well I sold too early. It’s now $109 and had a 4:1 split.
There we have it, those are some of the investing mistakes that I have made. I know I’ll make more, but I feel that these are pretty good lessons that I will continue to remember for the rest of my investing years. The great thing about investing is that it gives you a dose of humility, because the temperament of Mr. Market is unpredictable. Investing through a market crash (2008) gives me that perspective, and hopefully I will be mentally prepared for the next crash.
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.