Learning from your own mistakes is hard. It’s the reason you still watch Grey’s Anatomy, you still try to play the acoustic guitar at parties, and you’re still wearing that fedora.
But when it comes to your financial security, it’s crucial to take a cold, hard look at what the common mistakes are and how you can avoid them. After all, it’s your money, not an eyebrow piercing.
Mistake #1: Not knowing what you actually want
Before you start investing, clarify what you actually want to do with your money. Saving for grad school next September? Thinking about buying a condo in five years? Want to retire at 55? Your goals are going to determine your financial strategy. Sort them out before you start to do anything.
Mistake #2: Not doing your research
Discovering a sweet pair of speakers and then buying stocks in the manufacturer is not making an investment. An investment is something you’re truly comfortable sticking with for the long haul. Read up on everything you can about a company and its prospects, or talk to a financial planner, before you start moving your money around.
Mistake #3: Reading too much into the headlines
You’ve crafted a solid financial plan based on your goals, your resources, and your risk tolerance. Then six months later, you fall into a news cycle stupor and become convinced that if you don’t empty out your account and start investing in drone-powered dog walkers, you’ll be toast. By all means, stay informed about your investments by talking to a financial planners or doing your own research. Just don’t rely on clickbait.
Maybe you’ve made some of these mistakes already? Don’t worry, you’re in good company. We checked in with three Canadian investment bloggers to see how they’ve screwed up, and how they managed to sort things out.
Marketing manager at a renewable energy firm, blogger at My Alternate Life
My biggest mistake was that I waited too long. It seemed overwhelming, so I just didn’t do it. I used the excuse that I was in debt and I didn’t have any money to invest. But really I did, I just didn’t know where to start. So I didn’t start at all.
I’m really lucky that I found the Canadian personal finance community. It’s a big group of people that are dedicated to managing their own money, without professional advice. I started reading up on their blogs, and I found a few really good books. I know that a lot of people don’t read books anymore, and that the internet is huge for finance, but what I was looking for was a really targeted primer. No theory, just “how do I literally get started?”
Investing is a big world, and it gets really technical quickly, so I found these beginner-oriented books super helpful. “Millionaire Teacher” is great one, written by teacher who actually retired a millionaire. After reading these, it took about a month or two before I started putting money away, transferring $150 off each paycheque into my retirement. And then it took another year before I stopped getting all panicky when the market would go down. But I got desensitized to it, I calculated my returns, and could say to myself, yes, this is a good strategy, and it is making me more money than just putting it in a savings account.
Lesson learned: Investing is scary, but procrastinating is scarier. Put aside some time to figure out what your goals are, what you need to know, and how you can get there.
Personal finance blogger at Money We Have.
I started investing as soon as I started working, so when I was about 17.
My biggest mistake was blindly trusting my financial advisor. He had me invested in mutual funds that came with a lot of extra fees and charges, even though these funds didn’t fit my investment goals. Once I realized, I fired my advisor and started to invest on my own.
I still made a few mistakes as a do-it-yourself investor before I learned my lesson. I invested in things that I had no real concept about because they were popular, or I felt they were safe. These days I just stick to my plan, and I don’t let outside factors, like Trump being elected, affect my investing decisions.
Lesson learned: If you’re using an advisor, make sure they get where you’re coming from. They should be able to offer a tailored solution for whatever stage you’re at, rather than just selling you stuff.
22, Founder and Contributing Author at Bay Street Blog
I opened a trading account as soon as I turned 18, and started investing the money from my first part-time job. My biggest mistake at that time was relying on secondhand stock market research, believing other people about which stocks would succeed.
I lost more than 50 percent within a year for the first stock I purchased. This was one that was supposed to “outperform” the markets, according to the experts anyway. Since then, I always do my own research before I purchase a stock, and I stick to my specific strategy.
As a do-it-yourself investor, it’s extremely important to understand the company before making the decision to buy or sell it. Knowing what to look for in a company before investing makes it much easier to make the right decisions.
Lesson learned: Do your research. Seek out as many expert opinions as you can, then pick the strategy that makes the most sense to you.