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1. Invested small positions in individual stocks (especially those speculative penny and internet bubble stocks of the 90s) particularly those we were persuaded to jump on by friends/business associates or through something we heard about in the news.
2. Used past performance returns or impressive loooking awards or ads in a magazine to determine which mutual funds to make an investment. These funds always seemed to tank after we got in....
3. Set up accounts with multiple random mid-sized or smaller mutual funds, banks, online trading accounts, etc. resulting in us ending up with a bunch of accounts to keep up with and a scattered approach. Instead, should have just gone with a few, larger integrated companies as we have now.
4. Shopped around for a lower mortgage rate...believe it or not, I didn't even know this was something you could do when I was 27 and was buying my 2nd home through my company relo plan. I just took 'the package' offered, duh.
To be fair, this was decades ago before fierce competition in the mortgage industry became all 'the rage'. Still, I probably could have done some legwork and save myself some "points" as it was back then with rates in the 7-8% range.
The good news is that amidst this we still did a lot of things right and didn't screw up for too long. Read some great books at the library that got us on track.
Looking back, is there something you would've done differently to increase your wealth now?
Good question. I am 33, but if I am 26 just finishing college I do this:
I would do the following:
1. Get less student loan as possible.
2. Max my 401K every year to $17.5k if possible or high as I can
3. If I can do step 1 to full max, I would max ROTH IRA to government limits, $5.5K
4. For each account 401k and ROTH IRA, choose a asset allocation of 100% stocks, and invest all money in the S&P500 index or the total stock market index.
4. Reallocate to 90/10 stocks to bond ratio once I get 30.
5. Any extra money, use to pay off student loan
6. Once student loan is paid, save for car.
7. Never buy stocks,
That's probably the worst thing you can do to your finances under 25. The rates are so variable. They can go up on a whim from 10% to 25% or 27%. If the CC company doesn't like you, boom, up to 29% or something. Relying on credit cards to "make it" is whacked.
-I would avoid technical analysis. I think its something you get into when you're 18, 23, interested in stocks.
One of the big financial gurus said, "I've never met a rich technician". There are no technicial analysts on the Forbes 400.
Technical and fundamental analysis is a big diving line for investing. Like the parting of the Red Sea, one path leads this way, one leads that way. They are very divergent, they get more divergent over time. I.e. the 40 year old Elliot Wave newsletter writer. Or the 40 year old guy crunching fundamentals, income statements, etc.
Pay attention to philosophy.
-I would also look at "everything", stocks, bonds, currencies, commodities.
It doesn't mean you have to invest in them, but just have them on your radar. Know for example, the swiss franc has gone up how many hundreds of percent against the dollar vs the 70's? Look how different asset classes move over the decades. Investing is a big 3-D puzzle, things are always moving.
-Also about technical analysis, you can get into some really esoteric indicators, bollinger bands? LOL. There was one that had to do with MACD. I think it combined MACD with something else. It was going to be my holy grail, lol. It was going to make me millions, haha.
You'd be better off reading biographies of successful investors, or paying off a car loan or something.
Looking back, is there something you would've done differently to increase your wealth now?
I wish I had:
--Been more focused in college and graduated in 4 years instead of 6.
--Majored in finance instead of liberal arts.
--Not wasted my time with a semester in grad school that cost me 12K in student loans, plus interest.
--Invested in good balanced mutual funds from the start. I had such a fund in my retirement plan (American Funds Income Fund of America AMECX) but didn't know much about investing when I started. I didn't realize that the better balanced funds over time tend to match the performance of the S&P 500 with less volatility.
--Not invested in individual stocks.
If I had done all of these things I'd probably easily have 200K more than I do now.
If I had just invested in a balanced mutual fund and not bothered with individual stocks, I'd easily have at least 50K more than I do now.
Should've Would've Could've .... what past is past. Need to move on.
You will not gain anything thinking about what you did wrong. I did lot of things wrong. I pray to god that I will not make the same mistake again.
People might learn from listening to other people's mistakes.
I think that is a valuable resource.
People who don't learn from other's mistakes are kinda...I dunno...you shouldn't squander the opportunity to learn something.
I would have started investing for retirement years earlier.
I would have never borrowed money to buy a car.
I would have taken better care of my comic books and baseball cards.
The thing that would probably have netted the highest return today would have been if I'd bought up a barnload of the old muscle cars that could be picked up in decent shape for a few hundred bucks a piece at the time.
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