This is a blog swap from Joe at Retire By 40, where he blogs about his journey to early retirement. This week’s topic is “If you had one financial do-over, what would it be and why?” See my take on the subject – Car Purchase Do-Over And Over And Over on his site today.
We all make financial mistakes and I’m not an exception. I made many bone-headed mistakes over the past 15 years and still continue to make new ones. When this happens, of course I’d like a do-over. When I first started working in a blue chip technology company, I put all my 401k contribution into the company stock. This worked fine when the dot-com bubble was inflating, but when the bubble burst, my portfolio (along with many co-worker’ portfolios) lost quite a bit of value. Back then, I probably had 75% of my net worth in the company stock and it was a mistake I won’t repeat. Now, I have around 5% of my net worth in the company stock and that’s only because we can buy discounted shares. Of course, after the Enron incident many companies removed their stocks from the 401k plan and it’s really for the best.
I made other mistakes and many of them were due to lack of financial education and investing experience. My asset allocation was a mess for many years. It’s difficult for an inexperienced investor to come up with an asset allocation they are comfortable with and can stick with for the long-term. It took a lot of trial and error, but I finally came up with a plan that I can live with. Once I had a plan, the emotional roller coaster became much easier to handle. It would have been great to give some advice to my younger self and avoid those many financial mistakes. So if I have one financial thing to do over, I would love to have found a good financial adviser I could trust.
A good adviser is difficult to find. When I started investing, I went through a few professional advisers who were just out to make money via commission and other avenues. It really turned me off and I became a DIY investor. I was a slow learner though and learning through experience can be painful. Unfortunately my parents were not good investors either, so I could not ask them for advice. They are great savers, but investors – not so much.
It’s too bad that I don’t have a time machine so I could go back to 1999 and tell my younger self to dump tech stocks. However, I can teach our kid about saving and investing early on and hopefully be around when he starts investing. Even though I couldn’t find an advisor that I was comfortable with, at least my kid will have one. My philosophy is: It’s no use dwelling in the past and wishing for a do over. What we can do is learn from experience and avoid making those same mistakes again.
[...] TweetThis is a guest post from Hunter at Financially Consumed. This article is part of the Yakezie Network 10th annual blog-swap. The topic for this event is “If you had one financial do-over, what would it be and why?” You can read my take on this at Hunter’s blog. [...]
Thanks Joe, Yes, a time machine would be very handy. Like you say, as long as we learn from our mistakes and try not to repeat them, then they have been worthwhile experiences. It’s great that your parents set a good savings example. This is the foundation of a financial plan. Without mastering this, your options are very limited, and it’s difficult to have a do-over when you’re about to retire.
Thanks for hosting my post! I agree that saving is a great foundation, but it’s not enough these days. We all need to know more about investing as well.
I think learning how to invest is as important as learning to be frugal. The problem is most people have trouble doing either. Hopefully many young people will learn from all the blog out there.
I worked for an Enron-owned company just before their fiery collapse, and had an @enron.com e-mail address. We routinely got e-mails telling us what a good time it was to invest in the company. I didn’t invest but coworkers had their entire retirement in company stock and touted it as fool-proof. I left just before the s$#* hit the fan and was glad to have avoided investing in them! I knew a number of coworkers who lost everything when 401(k)s were frozen, while the execs were cashing out. Did you see “Enron: Smartest Guys In The Room”?
Oh wow, I’m glad you got out just in time. My investment didn’t turn to 0, but it dropped a lot. At least when it happened, I didn’t have that much money accumulated yet. It would have been devastating if I worked for 30 years and have Enron happened right before retirement…
I didn’t see the smartest guys in the room. I’ll keep an eye out for it.
Good lesson learned…too bad it had to cost so much to figure out!
[...] at Mom’s Plans. You have to watch out for the hard sell!- Joe at Retireby40 tells us about How He Invested his 401(k) in Company Stock right before the dot com crash, at Financially Consumed. A financial adviser may have helped [...]
I completely understand. Investing information is so important and it’s easy to get misled by unscrupulous advisors. Obviously you are on your way now!
[...] Joe at Retireby40 tells us about How He Invested his 401(k) in Company Stock right before the dot com crash, at Financially Consumed. A financial adviser may have helped [...]
[...] Joe at Retireby40 tells us about How He Invested his 401(k) in Company Stock right before the dot com crash, at Financially Consumed. A financial adviser may have helped [...]
Sorry to hear that. A financial advisor would be a good asset to have, however with many of them following the crowd, you would need to find someone who isn’t afraid to break rank.
[...] Joe at Retireby40 tells us about How He Invested his 401(k) in Company Stock right before the dot com crash, at Financially Consumed. A financial adviser may have helped [...]