I spend a lot of time on My Own Advisor sharing what’s working in my financial plan and how incremental money management changes are moving me forward towards my goals each month.
Making my savings automatic, investing in the market, holding stocks that have paid dividends for generations and killing off mortgage debt are key elements of my financial plan. On the other hand, I’ve made some mistakes over the years that I wish to avoid repeating. Thinking about my mistakes reminds me of this quote:
Insanity: doing the same thing over and over again and expecting different results – Albert Einstein.
By learning lessons, hopefully I’ll only make some financial mistakes once. To help you avoid some of the money management mishaps I’ve made over the years, today’s post highlights some of my dumbass financial moves.
Buying mortgage life insurance
I held mortgage life insurance for a bit, many years ago. I don’t recall how I got sucked into this product but I did. I suspect I just listened to someone at the bank without doing any homework. I think most homeowners are better off with individual life insurance instead of mortgage insurance. I’d like to hear from some life insurance brokers on this topic. I don’t own mortgage insurance anymore and never plan to again.
Buying penny stocks
I bought a couple of penny stock companies in my 20s, hoping they would skyrocket in value over time. These guys never went anywhere but down. I still own two of them in my trading account as a reminder of the money I’ve lost on trying to cherry-pick stocks that have little to no established history of capital gains or any dividend histories. I only invest in broad market ETFs and dividend paying stocks now.
Investing in high-priced mutual funds
In my 20s, I invested in mutual funds that charged money management fees close to 2%. I simply didn’t know how much fund fees will eat into my investment returns. On top of that, I had no idea that most mutual fund managers have no hope of beating their benchmark index, even after a few years let alone after many years. I don’t invest in mutual funds anymore and never plan to again.
I’ve calculated these mistakes have cost me a few thousand dollars over the years but such is life. I guess life wouldn’t be very interesting without making a few bonehead moves along the way.
You may not realize it when it happens, but a kick in the teeth may be the best thing in the world for you. – Walt Disney
Any financial moves you’ve learned from? Share them in a comment below or in a tweet. Maybe you can help others with your story.