Mistakes I've made in the last 3 years

[RioIndy]

*Sorry corrected a couple typos, I was off by 1 year*

Hello All,

Just thought I'd summarize a couple of mistakes I've made with my investments and see what you all think

So only started educating myself late 2010. Went all in with most of my liquid cash I had in early 2011. I'm from Canada and focused on the TD E-Series of low MER index funds.

Mistake: I put it all in TD E-Series TDB900 (Canadian Index Fund). This fund was one of the few that did really well during the recession, so it was priced really high when I bought it, and sure enough it has been the biggest paper loss that I've been carrying for the last 3 years. (though almost back to neutral now)

Mistake: My next batch of money that I had I put it into TDB648: Precious Metals fund. Same mistake as with the CA index fund: I bought when it was really high, another huge paperloss that I am now carrying. It also has a huge MER of 2%.

Mistake: I was not fast or aggressive enough with buying the US index fund, TDB902. This one had done the worst previously, and for the last 3 years has easily done the best. Should have bought more. Even though in 2011 everyone was saying that I was too low on my US allocation, I didn't listen enough.

Right now I am too heavy on my CA index fund, but I still want to Dollar Cost Average so I am continuing to buy it regularly, but am trying to re-balance slow over time by buying more US, international index funds.

Overall starting in 2010 didn't work out for me as everything was cheap in 2010 and then again in 2012, but early 2011 everything was overpriced.

 

[plex]

Eh, sounds like you need to do a lot more reading to get your basics down, or actually get a reasonably priced adviser to manage things for you if you are still having trouble.

Just FYI, 2010 wasn't a bad year, it was a reasonably good year, and of course 2009 and 2011 were great. Sounds like the classic buying high and selling low mindset, and since it is usually emotionally based, that sort of mindset doesn't disappear in just a couple years. From the sound of it, you haven't had much time to learn the basics, so I think that should help you a great deal.

 

[RioIndy]

OOPS! Sorry I made a mistake in what years I was recollecting. I was off by 1 year but corrected the original post now. Should make more sense.

Besides the mistakes above, I have made a lot of good decisions I think. I have been dollar cost averaging the entire time with additional buys when the market takes large dips.

 

[pb4uski]

Lesson learned: market timing doesn't work.

Slow and steady wins the race. Do some reading/research and set an AA that fits your situation and risk tolerance. Or better yet, compose an investment policy statement (that would include a target AA and other things). Then stick to it and during accumulation phase use new money to rebalance.

Act like a tortoise.

While I think most of us here have no or little precious metals in our AAs, is there a way you can get a tax benefit of the loss in that security?

 

[Donzo]

I'm pretty good at "sitting on my hands" when it comes to investing thus, staying the course. But, I changed my allocation from 70/30 to 50/50 when the DOW was about 13,900. Should have sat on my hands a little longer seeing that the DOW soared to over 15,000 . So my mistake is leaving the party (partially) early. But, had the market dropped before 14,000 I would have been a market oracle in my own mind.......

I have plenty of dry powder for the next drop

 

[REWahoo]

Mistake: I put it all in TD E-Series TDB900 (Canadian Index Fund). This fund was one of the few that did really well during the recession, so it was priced really high when I bought it, and sure enough it has been the biggest paper loss that I've been carrying for the last 3 years. (though almost back to neutral now)

Buying the hot fund (chasing returns) is like picking the winning lottery number the day after the winner is announced...

Mistake: My next batch of money that I had I put it into TDB648: Precious Metals fund. Same mistake as with the CA index fund: I bought when it was really high, another huge paperloss that I am now carrying. It also has a huge MER of 2%.

I'm of the opinion emotion drives the value of precious metals and I try to invest without emotion, so I don't include them in my AA.

I was not fast or aggressive enough with buying the US index fund, TDB902. This one had done the worst previously, and for the last 3 years has easily done the best. Should have bought more. Even though in 2011 everyone was saying that I was too low on my US allocation, I didn't listen enough.

As others have pointed out, "fast or aggressive" aren't terms most successful individual investors would use to describe how they built their retirement portfolio.

Lesson learned: market timing doesn't work.

+1

For the vast majority of individual investors, this is a true statement.

Slow and steady wins the race. Do some reading/research and set an AA that fits your situation and risk tolerance. Or better yet, compose an investment policy statement (that would include a target AA and other things). Then stick to it and during accumulation phase use new money to rebalance.

Act like a tortoise.

+1

 

[Rothman]

I have always been curious on the concept of paper losses. I think if gains are real, not paper gains so are losses. The trap this way of thinking leads to is staying in bad funds/stocks instead of moving to better performing funds.

 

[Nemo2]

I have always been curious on the concept of paper losses. I think if gains are real, not paper gains so are losses.

+1

From my perspective those 'paper gains' were there - we could've cashed out at that time and taken the money...so for me any subsequent 'paper losses' are/were also REAL losses.