Friday, February 24, 2006
My Top 5 Financial Blunders
1. Buying a new car, first year model. Financial loss: $4000.00 Sometimes treating yourself is okay in moderation. As much as the urge to get something I really, really want pushes me towards something, I usually do okay, and think about it. In this case, I really wanted a new car because it was reintroduced after being discontinued for 8 years. Unfortunately this binge purchase costed me a hefty $4000.00. I paid a premium for a car that was in demand when it was first released. I didn't regret buying the car, just when and for how much. Lesson learned: Sleep on it. Never buy cars when they are introduced. 2. Roth IRA at a full service brokerage. Financial loss: $3000.00 When the stock market was booming, I just knew I wanted a Roth. Didn't do much research and went with a brokerage because I knew someone there. I didn't educate myself about the fees involved. Nor did I think about what if the person I knew left the brokerage? Lesson learned: Learn about all the fees involved with any account. Don't open an account with someone you know just because you know them, you still have to do your homework. 3. Speeding. Financial loss: $1500.00 No excuses here. Just shouldn't have done it. Ticket, ~$250. Insurance increase for 3 years, ~$1250. Lesson learned: Don't be stupid. 4. Selling stocks too early. Financial loss: $ a lot This one is tough. I have a habit of eating my losses too early. Patience is something I need to learn when it comes to the stock market. It seems everytime I sell, stocks go up. I should post when I sell :). Lesson learned: Beats me...I don't have an idea how I'm going to change my habit here. Maybe set a low sell point? 5. Investing on gut. Financial loss: $ a lot I need to educate myself on stocks and the industry. I know some basics, but I often find myself buying stocks because: a/ I know someone working there, b/ I like their products, c/ I read some article about a hot new stock. Lesson learned: Research the industry. Read more than one article. Look at the financials of the company and its competition. That's it for now...my top 5 financial blunders...for now. Hope I can avoid em all in the future.