Sarah O’Brien works hard and writes about personal finance.
One of the best benefits of being a personal financial reporter is my keen ability to recognize many of the financial mistakes I’ve made in my life.
I have already revealed Few in the first iteration of this confession two years ago. While some of my blunders were worse than others, they all make me feel awkward — and the ones below will leave some readers in their faces. Others of you may contact you.
Either way, I hope sharing this stuff will help someone else avoid the same mistakes – which come with potential long-term consequences that aren’t particularly good. It’s hard to calculate the cost of my fluctuations over the course of my business tenth generation I have come of age, but suffice it to say that I would have more money if I made better decisions.
Here are just a few of the gems, in no particular order.
For at least two decades I was in adulthood when I decided I could see the future. That is, I just learned that the stock market was about to go down and will stay down for a while.
The crystal ball reading talent appeared when coins were rolled from an old woman 401(k) In my then current the retirement the account. I confidently put the replenished money into a money market account (it earns nearly 0%) so that I can buy shares during the impending market downturn, and thus be in a position to reap the gains when the market goes back up.
So, of course, stocks rose in the days and weeks that followed, as I waited for the big drop.
It did not come true.
I waited months. By the time I actually transferred the money to a stock-intensive target date fund — not because the market crashed, but because at that point I had developed a fear of missing out — the stock kept going up.
By keeping my money sidelined, I’ve missed out on those gains—plus any compound interest the money would have earned, both during those months I stayed in cash and into the future.
The first time I signed up for a 401(k) plan as a young adult, I had only a basic understanding of investing.
That is, I knew that the stock market generally rose over time and it was a good place to put long-term savings, such as retirement. Details, though? Not much.
So when I had to choose from a bunch of money to guide me 401(k) contributions, I did some research: I asked a female co-worker near me which fund she would choose. shook her name. I told her it looks good, so that’s what I decided to use as well.
“Wait a moment,” she said. “I don’t want to be responsible for ruining your retirement if your investments go off.” She dismissed the idea with a wave of my hand and assured her that she was the smartest person I knew.
Now, this was long enough that I didn’t mention the fund’s performance or my account balance when I eventually transferred the money to another retirement account.
But here’s kind of the point: I had no idea what I invested in.
For all I know, the fund I chose was in “safe” investments (US Treasuries, cash) that may not keep pace with inflation and not provide the kind of long-term growth that stocks can achieve. I also didn’t know how much the fund would cost me each year of fees.
In other words, I had no idea if it was ever appropriate for my individual situation.
I participated in five home purchases as an adult. One is sold “as is”.
A friend of mine at the time said, “Whatever you do, be sure to check out the house before you buy it.”
I assured her that I would, then immediately decided to ignore her wise advice. I thought the seller wouldn’t fix anything, so what’s the point of checking? After all, I had looked closely during my pre-purchase visit to the house and nothing major had jumped out at me.
Well, let me tell you in case you don’t already know this: there are plenty of things that can go wrong with a home and its possessions that are not immediately visible. Depending on the details, It can be really expensive to fix.
While I don’t think getting checked before buying this particular home would have changed my mind about buying it, it could very well have resulted in more negotiating power over the price – and in the process, saved a boatload in interest as it would have counted on less Mortgage amount.