- Let a stockbroker choose your investments.
This was one of my earliest mistakes. I had some money to invest, so I called a stockbroker who was a friend of my father’s and asked him to invest it for me. He took over my account and bought me some stocks, which looked okay. But not long after, he suddenly said those stocks were not good anymore; I should buy different stocks. I saw this happen several times and finally realized that I was just being turned over all the time; I wasn’t making money, but he was making commissions. That’s a stockbroker’s job: to buy and sell so he can make commissions. So I took my account away from him and started investing in mutual funds, where I have invested ever since. - Chase a “hot” mutual fund – all the way down.
When I was looking at mutual funds, I found one really hot, fantastic fund with a terrific record. As a reporter I was interviewing fund managers all the time and I thought this particular fund’s manager was brilliant. Then the fund started going down. I called the fund manager and he said, “No problem – just keep holding on.” So I did. I rode it a long way down before I realized that the stocks he had invested in, which at the time were heavily energy stocks, were falling apart, and that I shouldn’t be in the fund. So I sold it. That’s lesson number two: when you buy a hot fund, realize that it probably isn’t going to be hot two or three years from now. - Speculate.
To my regret, I bought a little gold at the peak of the market in 1980. It seemed so exciting. We all know what happened to that. The lesson: avoid fads. When something is rushing up in price, you probably shouldn’t be there if you’re a long-term investor. Don’t try to be a speculator. Don’t go in and out of a market because timing just doesn’t work. You may get lucky once and sell at the top and buy in later, but more often you’ll buy and sell at the wrong time, pay commissions and costs, and not get anywhere. Trading in and out is a big cost – you’ll have better results if you simply don’t trade as often. - Follow a real expert – into a high-risk opportunity.
Like I mentioned, I depended on a money manager I thought was a true expert in his field, the energy market. He said to me, “Jane, you really should put some money into this oil well in Ohio. It’s a very special deal.” So I did, and it was a dry hole. He called me and said, “Gee, Jane, I’m very sorry.” He was at the top of his field, but he was still wrong.
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Hello Deborah, It's great that you've told us what food items you are not eating in order to loose weight and stabalize your blood sugar levels. But what items are you eating? According to your article you're not eating much, other than low car
I love listening to French Radio on Pandora. I feel like I am strolling down the Champs-Elysees. The music is happy and takes me right back to Paris. Enjoy it!
Hi Jane:
I have been using the YNAB program for a year or more. I am astonished how things look when it’s all laid out in black and white. One area I was particularly zany on was my profeessional fee’s. They always seem to hit me at just the wrong time, and they are substanital. I was able to use YNAB to budget in a proportional amount each month, and suddenly it looked much more manageable.
Hi Catharine, I’m a big fan of getting hold of your spending by writing down what you’ll need money for setting aside the cash. Storing money in buckets or envelopes, for specific future expenses, is a great way of doing it. Mvelopes.com is another site that does this, along with YNAB.
Jane
I am an Artist that gets very freaked out when I have to think about these things. Where does a person start to learn about all this stuff? I have a little money that I would like to see grow for when I’m too old or sick to work. I have my own business and have nothing but myself to depend on. Thanks for any help you could give me.
Can I suggest that you put your spare cash into a ‘safe’ bank (Whats that??) lol at the highest interest you can get and don’t touch it. Be happy to pay the tax and let it grow. This is the least risky option and this way, your principal investment always stays!!! It’s the way our parents used to do it. They never got hugely rich but they did’nt contribute to anyone elses life style either!!!
Another level up from that is as follows:
At the same time, you could invest long term in a few shares in your investment bank ( choose one that pays a fully franked dividend, which means they’ll pay your tax) and that way you’ll benefit from the profits the bank makes and your tax will be minimal. You’ll also learn another few lessons about being a share holder ( a slightly more risky, capitaliic nature necessary here). I also buy a few shares in the supermarket from which I buy my food, and the dept store from which I buy most goods!! Its called ‘havin’ a bob each way’ !!
I didn’t do this and wish now, in retrospect, I had. Good luck!
Take a look at my new book, Making the Most of Your Money NOW–it gives you lots of advice and information on everything about personal finance. Just look up the topic you want to know more about, and read.
I also have a shorter book–Smart and Simple Financial Strategies for Busy People. It’s the Cliffs Notes to my new, comprehensive book. Smart and Simple explains what I think are the few, top ways of managing money for people who want to keep things simple. I use these ideas myself.
Jane: Wow! I wish I knew where to start! Investing is so scary for me. My husband and I have very little invested – and all of it in employer-related programs. We are working on paying off our “stupid” debt – which should be accomplished in a little more than a year. Then, we will start working on investing the money that we have been spending in interest. I love that you have shared your four mistakes. That is a starting place for me. We had a business that failed a few years ago and that experience took us to the bottom of the pit financially. We are working to climb out of that pit and can’t start building a mountain (or at least a hill) of savings/investments until we are on level ground. Thanks for the post!
See my note above, it might help with the digging out.
Hi Jane, I’m nearing 50, starting from scratch, which includes being a non-traditional student, working a part time job, and living at home again with my father. I’m making about $380/month right now. I’m normally a good saver. I did pick up a few items during the recent holiday sales, with the help of a student loan.
What is a good way for me to get started investing? The most valuable lesson that I’ve learned was when I did have money and a full time job, not to co-sign for another person, (friend, family – whoever) and a few other valuable lessons that I won’t go into. It’s one thing to lose all that you have. It’s another to be held responsible for someone else’s mistakes!
Meanwhile, things are definitely looking up at this time. I thank God for what I have, and for a family who has been supportive of my situation. I have so much to be gratetful for.
Thanks
I wish you well, you’re not the only person starting from scratch today! First, I’d use your saving skills to accumulate a cash hoard, to help pay for schools and help get you started when you leave home, take an apartment, or move to find a new job. Once you have $2,000 or so in the bank, you can turn to mutual funds. At T. Rowe Price you can invest as little as $50 a month, if it’s done automatically from your bank account. I’d pick its “index fund” which follows the main U.S. stock market average (Standard & Poor’s 500 is the name of the average)
I am living through my most valuable lesson right now! We have very little in our emergency fund and my husband was recently laid off. This is the only time this will happen. Once DH lands another job, the emergency fund is first on our list to “pay.”
Amen!!
Hi Jane, Thankyou for sharing those valuable insights. They’ve happened to me along the way to varying degrees and each time, after the initial anger and shock, there emerged a deep life lesson!!! lol. And I must say I needed to have those lessons because when I started I knew nothing about money. I suspect there is a lot I still don’t know but I know one thing for sure and that is that if you put someone else in charge of your money its like giving them permission to have their hand permanently in your back pocket, skimmimg off any gains you make. And sadly, greed is a curious thing because they lose sight of their moral obligation to assist YOU in making your money grow. It’s like they just cannot help themselves.. I think its done in the name of capitalism. If it’s done often enough then somehow the morality factor ebbs away from their psyche.. if they ever had it.
Is my cycisism showing???
SO, in short… You probably have to make those mistakes to learn the true nature of people who make money investing other people’s dollars.. and slowly learn that the only person you can really trust is YOU!! PS commission has become an amoral issue in our culture….to the huge detriment of many!!!
ps… I’m still behind!!!
See my note about my book above. I really think it will help you figure things out, and find an adviser who doesn’t charge commissions or sell products. The new, big, book covers everything in personal finance, the shorter book is my personal list of the smarter, simple things I know (and use myself)
Hi Jane, I have just read your info and the comments of those who have posted. I am 67 and a widow. I am on SS and own my home and car. I have also been self-employed assisting senior citizens for 20 years. My single long-term client has just died, so that I need to augment my income. Do you have any suggestions for my situation.?
You’re obviously good at what you do, if you helped a single older person for a long period of time. Look for a placement agency that finds helpers for seniors?
It took me 2 years to realize my stock broker would sell stocks, send me a statement twice a year, charging me a fee right before he took a winter vacation to the tropics. I quit him and told him why, of course he denied his need for vacation money…I was furious.
Hi Jane. I just turned 60 and have learned the lesson that wives shouldn’t leave the finances up to their spouse. Now he is gone and I’m starting from scratch as to what I should be doing financially. My best advice to all women is to stay involved in the finances even if your spouse handles everything. Thanks for the valuable service you are doing for all of us!
I wish for that day back in March of last year when I paniced. Stocks that I had held in solid companies suddenly felt like liabilities in my fear-dominated state of mind. So imagining it was the end of the world I let them go. Had I not, I’d be much farther ahead now. That is a tough call to make when the market is making history and no one has any clue as to what it is doing. But there is a bit of a lesson in it.
Kathy
If you owned a mix of stock mutual funds and bond mutual funds, you’d have had a bond cushion, and might not have panicked at quickly. I keep saying, “read my book,” but there is a lot there for people in your situation.
Making mistakes is very easy, it is recouping your losses that is difficult.
I totally agree with your financial lesson. I trusted a financial adviser & ended up losing 75% of my investment. I reviewed my statements & found that he kept charging me fees and he was making more than me. He never advised me to sell when the market began to fall. He said just ride it out. I took what was left & invested it in Fidelity. They don’t charge for many funds.
Hello—would like to get the best, fastest tips on investing now. My goal 2010 is to do better than my husband is doing on my own. I have my own small real estate office (of course self-employed). I am a baby-boomer and I want the next 20 yrs to be great! Any suggestions would be wonderful1
Thanks,
J.Trigg
I’m a get-rich-slowly gal. I’d own a mix of stock and bond index funds for your long-term future (Vanguard funds are the cheapest). Looking for quick hits to beat your husband won’t make you richer 20 years from now. Trust me on this!
I have lost almost everything in this market. I am trying to hold on to my home. If I ever have any money to save I do want to know some safe way. What are Genmays or something like that I have heard of…do you knoe what they are.
va.
Ginnie Maes are investments in mortgages. Ginnie Mae mutual funds are a conservative investment (see Vanguard Group). Also look at US Savings Bonds, the I (inflation adjusted series). You can buy them at TreasuryDirect.gov
I have lost almost everything in this market. I am trying to hold on to my home. If I ever have any money to save I do want to know some safe way. What are Genmays or something like that I have heard of…do you knoe what they are.
va.
I too have lost almost everything…went from having net worth to having net minus in the hole! I have the same job and the same pay…so after I really looked at it all in the face, I decided to cut my losses and adjust my attitude about all of it. That was important. Then, once you stop beating yourself up, etc., you can make some crucial decisions. This all began with a divorce in my case. Sometimes starting over can be cleansing. BTW I am just past 60.