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I'm a firm believer in learning what not to do as much as what to do. Curious what investment mistakes people have made throughout the years, and what they would do differently.

I'll start. I regret contributing to a tradition 401k instead of a Roth during my early years of employment.

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So why not do backdoor IRA instead of a regular brokerage account?

matrix5k (Jan. 18, 2017 @ 12:17p) |

user1337 (Jan. 18, 2017 @ 2:27p) |

Because even with backdoor, Roth IRA is limited to $5500. My advice was assuming you have already done the best you can ... (more)

mojoshtudd (Jan. 18, 2017 @ 5:07p) |

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Held decaying volatility instruments for more than 1 trading day.

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Purchasing individual equities when I was getting started in investing.

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Playing penny stocks. Confused gambling with investing, it's two very different thing.

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Took rgthree's advice and invested in GT Advanced Technologies literally two weeks before it went bankrupt. Lost $5K.

Other than that, I've bought a few falling knives hoping I timed it right. I didn't. GMCR, NDLS, JCP...

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Buying stock tips on FWF. Specifically, "larrytrain" with MVIS. Ugh..

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This is the first thing I think of...

https://youtu.be/3w5D9yJUMOc



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Not doing your own research.

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Investing $500 in an MLP. What a waste of time this $500 creates every time I file taxes.

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Buying 20K in one stock many years ago, Global Crossing
Panicking in the 2008 meltdown, moving to cash close to the bottom, moving back in missing about 12% upswing

Never again, I learned my lesson. I hold a balance portfolio of mutual funds/ETF's and only gamble small amounts in my play account


 

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BostonOne said:   Purchasing individual equities when I was getting started in investing.

This. Also it was nerve racking to monitor them daily/hourly. Sold them at a loss (good thing because I would have taken ba bigger loss if sold later).

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i bought high, sold low

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tennis8363 said:   Investing $500 in an MLP. What a waste of time this $500 creates every time I file taxes.
  No K1 if the $ is in your IRA.

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1. Taking a job that requires me to clear every trade before placing the order - where 50%+ of my requests are kicked off to manual review and mostly denied because I could - in theory - have access to material non-public information about these companies.

Oh, by the way, the clearance is only valid for the calendar day in which it is approved and no in-and-out within 30 days.

2. Not maxing out my 401k before 2012.

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Holding losers. Or even worse, doubling down based on valuation.

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Over-concentrated (20%+) in subprime mortgage lender Novastar Financial in 2006. Near total loss.

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Only put up to the company match into the 401k if they offer one...it's a 100% return on your investment, but low growth mutual fund options from there with fees that eat up a lot of your returns. Research and diversify your own portfolio in individual stocks in roth ira from there. It sounds like you already figured it out!

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Delaying investing too late. Not even taking advantage of the employer ESPP plan at a 15% discount for the first 2 years.

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Actively managed funds. Multiple actively managed funds with significant overlap of holdings. Buying individual equities, watching them go down, then buying more to lower my avg cost basis, then watching them go down even more. Falling for that BS in the tech bubble -- we don't need profit, we don't even need revenue!

Lost money along the way, but it was a great feeling of relief and satisfaction as I unwound those mistakes, took the losses, and moved everything into a few index funds.

Best lesson I learned was to admit your mistake, take the loss, and move on. Don't throw good money after bad.
 

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Had a great income producing situation, actually 2 of them. One I was oblivious to, the other I delusionally thought would last forever. The 1st I could have retired at 25 yo. The second I could have retired at 30 yo. The 1st the laws changed. The 2nd my competition increased 100x.

If I was to postulate the life lessons out of these. If you find something that's pretty popular work it hard cause they're going to make it illegal. A job where you fall out of bed, show up & make tons of cash is going to get competitive.

I've caught some breaks since but nothing like these. I was young, strong & had no attachments. I didn't realize how easy I had it.

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Don't ignore dividend yielding investments, and reinvest them free of commission when possible.

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zapjb said:   Had a great income producing situation, actually 2 of them. One I was oblivious to, the other I delusionally thought would last forever. The 1st I could have retired at 25 yo. The second I could have retired at 30 yo. The 1st the laws changed. The 2nd my competition increased 100x.

If I was to postulate the life lessons out of these. If you find something that's pretty popular work it hard cause they're going to make it illegal. A job where you fall out of bed, show up & make tons of cash is going to get competitive.

I've caught some breaks since but nothing like these. I was young, strong & had no attachments. I didn't realize how easy I had it.

  Care to share specifics?

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zapjb said:   Had a great income producing situation, actually 2 of them. One I was oblivious to, the other I delusionally thought would last forever. The 1st I could have retired at 25 yo. The second I could have retired at 30 yo. The 1st the laws changed. The 2nd my competition increased 100x.

are you going to tell us what these are so we can actually learn something?

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If I shared specifics I'd probably throw up writing down all the money I left on the table. I'm queasy now.

I thought when I added the lessons I learned it'd be enough.
"If you find something that's pretty popular work it hard cause they're going to make it illegal. A job where you fall out of bed, show up & make tons of cash is going to get competitive."

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zapjb said:   If I shared specifics I'd probably throw up writing down all the money I left on the table. I'm queasy now.

I thought when I added the lessons I learned it'd be enough.
"If you find something that's pretty popular work it hard cause they're going to make it illegal. A job where you fall out of bed, show up & make tons of cash is going to get competitive."

1.  Pulling all of the online casino bonuses over and over again?  
2.  Growing weed in Colorado?  

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Got married.

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This is one I bring up often.

Maxing out your 401k contributions too early and missing the employer match for the rest of the year.

It's especially painful because it usually occurs the first year you make "real" money. When you subscribe to the philosophy of putting money in tax-free-growth accounts ASAP for future gains, you miss the fine print on your company's 401k match language.  It was an expensive mistake for me, but hopefully someone else doesn't make the same one because of it.   

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quaters said:   This is one I bring up often.

Maxing out your 401k contributions too early and missing the employer match for the rest of the year.

It's especially painful because it usually occurs the first year you make "real" money. When you subscribe to the philosophy of putting money in tax-free-growth accounts ASAP for future gains, you miss the fine print on your company's 401k match language.  It was an expensive mistake for me, but hopefully someone else doesn't make the same one because of it.   

  Can you clarify? I could contribute 18k in jan, or december and the match on my plan would be the same.

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pillsdoughboy1 said:   
quaters said:   This is one I bring up often.

Maxing out your 401k contributions too early and missing the employer match for the rest of the year.

It's especially painful because it usually occurs the first year you make "real" money. When you subscribe to the philosophy of putting money in tax-free-growth accounts ASAP for future gains, you miss the fine print on your company's 401k match language.  It was an expensive mistake for me, but hopefully someone else doesn't make the same one because of it.   

  Can you clarify? I could contribute 18k in jan, or december and the match on my plan would be the same.

  Some plans only match up to 1/12 of the max match per month, so you miss out if you front load it too much.  It's plan dependent, something to check if you're at a new company - make sure you understand how the match works.

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xerty said:   
pillsdoughboy1 said:   
quaters said:   This is one I bring up often.

Maxing out your 401k contributions too early and missing the employer match for the rest of the year.

It's especially painful because it usually occurs the first year you make "real" money. When you subscribe to the philosophy of putting money in tax-free-growth accounts ASAP for future gains, you miss the fine print on your company's 401k match language.  It was an expensive mistake for me, but hopefully someone else doesn't make the same one because of it.   

  Can you clarify? I could contribute 18k in jan, or december and the match on my plan would be the same.

  Some plans only match up to 1/12 of the max match per month, so you miss out if you front load it too much.  It's plan dependent, something to check if you're at a new company - make sure you understand how the match works.

It's typically written as a percentge match per paycheck, not necessarily per month. Depends how one is paid. Regardless, if you max out the $18k before your final paycheck(s), you may be without a match.

 

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Passed up on a project because the start date clashed with a vacation that I already paid for.

Invested in penny stocks.

Didn't buy more RE during the crash.

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xerty said:   
pillsdoughboy1 said:   
quaters said:   This is one I bring up often.

Maxing out your 401k contributions too early and missing the employer match for the rest of the year.

It's especially painful because it usually occurs the first year you make "real" money. When you subscribe to the philosophy of putting money in tax-free-growth accounts ASAP for future gains, you miss the fine print on your company's 401k match language.  It was an expensive mistake for me, but hopefully someone else doesn't make the same one because of it.   

  Can you clarify? I could contribute 18k in jan, or december and the match on my plan would be the same.

  Some plans only match up to 1/12 of the max match per month, so you miss out if you front load it too much.  It's plan dependent, something to check if you're at a new company - make sure you understand how the match works.

  Checking with the company is key. And make sure you have it in writing. Usually it will be spelled out with examples in the handbook. If it's not, make sure you get a response in writing and then spell out your example (maxing out by June will they or will they not "true up" based on what they told you) and ask for a reply to confirm how you interpret their initial reply.

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xerty said:   if you front load it too much.

Another issue is if you lose your job. I front loaded, and I switched jobs in June. I didn't contribute with the new company because I thought I was maxed out, but ended up getting a distribution from the former employer's plan because my total contributions exceed some percentage of total compensation that was only based on a half-year's worth of work. By the time I got the distribution, it was too late in the year to do anything to mitigate.
  

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BostonOne said:   Purchasing individual equities when I was getting started in investing.
  
I still do the same ... what do you do now?

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DoonGuy said:   
BostonOne said:   Purchasing individual equities when I was getting started in investing.
  
I still do the same ... what do you do now?

  Probably index funds
 

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DoonGuy said:   
BostonOne said:   Purchasing individual equities when I was getting started in investing.
  
I still do the same ... what do you do now?

When I first started investing, I probably had $10K and all of it was in individual equities. That was a mistake.
I now have a 7 figure portfolio, about 10% of which is in individual equities. The rest is in index funds/ETFs.
If I could do it again, I wouldn't purchase any individual equities until I had about $200K in investible assets. And even at that level, I wouldn't recommend it for a lot of people. Lazy portfolio would do just fine.

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I think that's good advice Boston. If you must speculate on individual stocks, active management or whatever, only do it on a small portion of your wealth.

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quaters said:   This is one I bring up often.

Maxing out your 401k contributions too early and missing the employer match for the rest of the year.

It's especially painful because it usually occurs the first year you make "real" money. When you subscribe to the philosophy of putting money in tax-free-growth accounts ASAP for future gains, you miss the fine print on your company's 401k match language.  It was an expensive mistake for me, but hopefully someone else doesn't make the same one because of it.   

  I thought it was just me! Unfortunately, this happened to me this year and I learned from it...harshly.

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First three nailed it and rest of responses filled the gap (pun intended).

1) Penny stocks
2) Day trading
3) Options (going long)
4) Not cutting losses
5) Averaging down
6) Marriage
7) MLPs in taxable accounts
8) Not maxing out 401k since my first job
9) Kids

Skipping 60 Messages...
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matrix5k said:   
mojoshtudd said:   
matrix5k said:   
mojoshtudd said:   
CamileBB said:   Thank you very much. Appreciate all of the input. DH and I are reading up on the lazy portfolios now
  Here's a quick step-by-step:

  1. ...



This would be after maxing out 401k and Roth IRA (if qualified) right?

 That would be how I'd do it - assuming the 401k options are good.
If the 401k doesn't offer good low-cost investment options, I might contribute only the amount that gets company match - instead of maxing it out.
Also, almost everyone is qualified for Roth IRA via backdoor


So why not do backdoor IRA instead of a regular brokerage account?

  Because even with backdoor, Roth IRA is limited to $5500. My advice was assuming you have already done the best you can with tax-advantaged accounts like 401k and IRA. 

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