Confessions of personal finance reporter (Part Two): 3 money mistakes

One of the best benefits of being a personal finance reporter is my keen ability to recognize the many money mistakes I’ve made in my life.

I already divulged some of them in the first iteration of this confessional two years ago. While some of my mistakes have been worse than others, all of them make me cringe – and the ones below will probably drive some readers crazy. Others of you may relate.

Either way, my hope is that sharing them can help someone else avoid the same mistakes, which have potential long-term consequences that aren’t particularly good. It’s hard to calculate the cost of my flubs over the course of my Generation X adulthood, but suffice it to say I would have more money if I made better decisions.

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Here are some gems, in no particular order.

I was at least a couple of decades of adulthood when I decided I could see into the future. I mean, I just knew that the stock market was on the verge of collapsing and that it was going to stay low for a while.

This crystal ball reading talent emerged when I transferred money from an old 401 (k) into my then-current retirement account. I securely placed the transferred funds into a money market account (earning nearly 0%) so that I could buy stock during the market downturn that was imminent and then be positioned to take gains when the market returned to the upside.

So obviously, the stock rose in the following days and weeks as I waited for the big drop.

This did not materialize.

I’ve been waiting for months. When I actually moved the money into a stock-rich target data fund – not because the market collapsed, but because I had developed a fear of losing myself by that point – the stock had continued to rise.

By keeping my money aside, I missed those earnings, as well as any compound interest the funds would have generated, both during those months that I sat in cash and in the future.

The first time I signed up for a 401 (k) plan in young adulthood, I only had a basic understanding of investing.

That is, I knew that the stock market generally grew over time and was a good place to put long-term savings, such as retirement. The specs, though? Not so much.

So when I had to choose from a number of funds on where to direct my 401 (k) contributions, I did some research: I asked a colleague close to me which fund he was choosing. She pitted the name. I told her she sounded good, so that’s what I decided to go with too.

“Wait a minute,” he said. “I don’t want to be responsible for ruining your retirement if your investments explode.” I waved away the idea and assured her that she was the smartest person I knew.

Now, enough time has passed that I have no memory of the fund performance or my account balance when I finally moved the money to another retirement account.

But that’s exactly the point: I had no idea what I was invested in.

As far as I knew, the fund I chose was in “safe” investments (US Treasuries, cash) that may not keep up with inflation and not provide the kind of long-term growth that stocks would have. I also didn’t know how much the fund would cost me each year in taxes.

In other words, I had no idea exactly if it was appropriate for my individual situation.

I was involved in five home purchases as an adult. One of them was being sold “as is”.

A friend of mine said at the time, “Whatever you do, make sure you do a home inspection before you buy it.”

I assured her that I would and then promptly decided to ignore her sage advice. The seller wouldn’t fix anything, I reasoned, so what was the point of an inspection? After all, I had looked closely during my two pre-purchase visits to the house and nothing important had come up.

Well, let me tell you in case you didn’t already know: there are many things that can go wrong with a home and its property that aren’t immediately visible. And depending on the specs, repairing them can be really expensive.

While I don’t think undergoing an inspection before buying that particular home would have changed your mind about the purchase, it could very well have resulted in more bargaining power over the price and, in the meantime, saved a boat load of interest because it would have been calculated on a lower mortgage amount.