My Tell All: Investing Mistakes in my 20’s

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.

Here are four investing mistakes in my 20’s that I have learned from:

 

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.

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.

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.

Join the Chain Gang

Hopefully it’s okay I join in on this chain gang, joining my first gang ever!

Don’t tell my mom I joined a gang!

Here are the other financial mistake posts from the PF blogosphere, lots to learn from everyone:

Anchors: A Journey to FI – My Financial Mistakes, Chronicles of a Father with Cents – My Financial Mistakes

Link 1: ThinkSaveRetire – Don’t brag about success; tell me your failures

Link 2: OthalaFehu – Budget Bungles, Money Muddles, and Fiscal Flubs

Link 3: Turning Point Money – My Financial Mistakes

Link 4: Femme Cents – 7 lessons I learned from my biggest financial mistake

Link 5: Mr. Jumpstart – Recent Financial Blunder

Readers, what are some of your investing mistakes?
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About genymoney

GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, investing, and living a minimalist lifestyle.

32 comments on “My Tell All: Investing Mistakes in my 20’s

  1. Yeah Jim Cramer sounds persuasive enough to make his viewers buy the stocks he recommends. He makes his points sound so valid that buying his stocks is a no-brainer.
    The one mistake I left out on my post was when I invested my 401K account in target date funds for a few years. I was in ‘set it and forget it’ mode because I didn’t want to worry about it. Turns out the fees in these funds were really high. From what I remember I believe the fees were just above 1% which can be a lot of money when compounded over time.
    Kris recently posted…If You Are Not Investing in the Stock Market, Do It Now Not LaterMy Profile

    • @Kris- Oh yeah I think 90% of people (who are not in the PF blog world) invest in high fee funds! I was with Investors Group when I first started and was paying over 2.5% without even knowing AND it wasn’t performing well and I was losing money.

  2. I made the same mistake in term of selling my stocks too early and hoping that it will drop and I can buy it back cheaper. Well, what do you know? It never went back down.

    After the 2008 crash, I am happy regardless of the market direction. If it goes up, I have my stocks performing well. If it goes down, I will definitely back up the truck this time.
    Leo T. Ly recently posted…Personal Finance Horror StoriesMy Profile

  3. Im going to write up my mistakes and my mistakes will make you feel so much better about yourself, I promise lol.

    I was never one to listen to Jim Cramer or any analyst… I realized that by the time they mention something, its probably too late. Also realized that sociology might get your farther than finance when it comes to choosing stocks.

    I was never into dividend stocks either. I mean I messed with them and was curious, but I liked my growth stocks. Give me some time and ill write up all my mistakes so we can all laugh at me together!
    Gabe at The Shiny Dollar recently posted…What Can You Do With 1000 Dollars?My Profile

    • @Gabe- Haha okay I am looking forward to it! You’re right and that’s exactly why I shouldn’t have listened to that hot stock pick- by the time I get around to buying it the excitement has already gone and it’s too late. I’m not one for growth stocks (no Tesla, Amazon, Netflix for me) but just general growth of the portfolio lol.

  4. I made many of these mistakes in my 20s as well. At one point I got really into trading and read a lot about it and watched videos on YouTube; for all that effort, I broke even, at best. Nowadays, I mostly just set and forget index fund investments, partly though robo-advisors.

    • @Miguel- I was also into trading too! Because I was on the west coast I would wake up extra early to try and ‘day trade’ before I went to work. Set it and forget it index fund is the way to go, thanks for sharing your experiences Miguel!

    • @Lily- Agree! Researching takes hours and days and I don’t have too much time for that, so I want to thank Mr. Bogle for his ingenuity.

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  6. I too am guilty of chasing dividends and trying to cherry pick that next hot stock. If I had a time machine everything would have found its way into vanguard index funds much earlier! The push to grow dividend income put me heavily into the offshore drilling sector right before the crash…. Talk about ouch! You have convinced me to make a mistakes post of my own at a future date. Cheers!
    Debtfreeduo recently posted…Our First Month of Blogging!My Profile

    • @Debtfreeduo- Me too! Haha, I would have done indexing much earlier, or at least set aside 75% of it to indexing and the rest I can continue to speculate/gamble. Offshore drilling sector- ouch indeed! Look forward to reading your post 🙂

  7. Great lessons learned here, especially to stop listening to Jim Cramer.

    Visa is a hard one. It always appears overvalued, but will likely have fantastic returns for long term holders. I didn’t buy into it until years after the IPO and still hold. Now only if shares would dip so I can grab some more.
    Turning Point Money recently posted…The Stock Market is Like…My Profile

    • @Turning Point Money- I can’t bring myself to buy Visa again, it’s like a long lost first love that I can’t go back to. That’s good that you own it 😉

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  9. I didn’t use to do my own research either, really bad mistake. I don’t even want to know how much I may have lost to date! My biggest lose was not selling Nortel at $120 and then when it started falling, I kept thinking it was a good buy!!!

    • @Caroline- Oohhh Nortel! My mom had Nortel too, and she just kept it to the bitter end. I’m not sure how much she bought it for. Me neither, I don’t even know how much I have lost to date (oh yeah, that’s another investing mistake I made, not keeping track of my portfolio!!!)

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  12. Thanks for joining the chain gang. I can totally relate to your first mistake on no asset allocation. I didn’t care about my 401(k) early on and I wonder what I missed out by deciding not to care about it. As for Jim Cramer, we have a Jim Cramer in our family and decided to listen to him about this hot pharmaceutical company that had gone down in price by 15%. Fast forward a year later and I’m slightly above water after having been down for almost that entire year…. opportunity cost … ouch.

    • @A Journey to FI- That sounds difficult to have a Jim Cramer in your family! I think we all probably know one 🙂 That’s good that you’re breaking even, but sucks about the opportunity cost, though it could be much worse…

  13. Pingback: 7 lessons I learned from my biggest financial mistake - Femme Cents

    • @Matthew Freeman- A lot of people are happy with their Canadian exposure (especially dividend lovers) because of the favourable tax treatment of Canadian dividends. Thanks for sharing what you plan to work on! 🙂

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