I simply HAD to share this post with you because the title sounds like my book’s: 12 Investing Mistakes I’ve Made (and what you can learn from them). And in addition to giving useful financial advice gained through experience – someone else’s – it also fits in my my theme for Fridays: learning from failures.
Note: The post is from Get Rich Slowly but is in fact a guest post from Pinyo, author of Moolanomy, a personal finance blog about money, wealth, investing, and more.
“Not investing soon enough” was Pinyo’s first mistake and it reminds me of something I read from drummer Paul Leim. His number one career advice for musicians was “pay yourself first” and this is what he meant. It’s advice I didn’t heed either, so I join with Pinyo and Paul in encouraging you to start investing immediately.
With that foundation, here are my two favorite “mistakes” from the post:
2. Not knowing the basics— When I finally began investing, my first move was to give my money to a full brokerage firm to invest for me. I didn’t know anything about stocks or mutual funds. I just knew I should invest money to make more money. This was a big mistake since each trade executed by my broker cost a lot of money. Also, the mutual funds they picked weren’t good, and were very expensive.
11. Investing without a goal — Not until recently did I define a real goal for my investment — among other things, one of my investment goals today is to build a $1 million investment portfolio by 2017. This is my main retirement portfolio. Other goals, which I am still defining, are investing to subsidize my kids’ college expenses and my parent’s retirement expenses. Without a clear goal, I was chasing short-term performance and was prone to act on market swings.
The subject of Financial Literacy, the basics of money and investing, is tragically absent from schools. In its absence, the banking and investing industries have been more than happy to play teacher. And their lesson has been that we can’t possibly understand money so we should just trust them to know what’s best.
There are two takeaways here: first, you can – and must – learn about money. Make this a high priority that you work on daily or at least weekly. It’s not difficult, but it does require effort. And don’t be afraid of the numbers and math. Third grade math skills will cover anything and everything you’ll ever encounter with money.
Second, find financial advisors – paid and unpaid – that encourage education and partnerships. Seek people that understand you are working together to manage the second most important asset you have – your money (time is your most important). It’s that important because you can’t live without money (hunting and gathering is out of vogue these days) and the final exam on this subject is 10, 20 or 30 years out. Failure is not an option. You must get your money act together.
Which leads to financial goals, or better yet, life goals. What in the world are you working for? Even with a cool career choice like music, we’re still talking work and money. What is that you are spending all this time creating? What do you want now, and in the case of investing, in the future?
Money is a tool. Make sure it helps you build the right life.
