Your Biggest Money Mistakes

Aug 12, 2023

By Josh Katzowitz, WCI Content Director

Money mistakes can affect you at any time in your investing career. Naturally, most white coat investors (and most investors, in general) will make bad decisions when they’re first getting financially literate. Dr. Jim Dahle made snafus when buying his first house and when he invested in loaded mutual funds early in his career.

In one of my first newspaper jobs, I took way too long to enroll in my company’s 401(k) and didn’t receive thousands in matching dollars, and WCI columnist Rikki Racela still bemoans the fact he lost tens of thousands of dollars on a whole life insurance policy sold him to by a salesman who he thought was a friend.

Even if you’ve become a smart(er) investor as you move into your mid- or late-career, you can still inflict painful wounds on your portfolio. Some would say I shouldn’t have bought a Tesla. Some might regret sending their kids to private school. Others might never start a Roth IRA, while others might pay high fees for terrible financial advice.

At WCICON23 last February, I corralled a number of attendees and asked them about their biggest money mistakes. Hopefully, you can either empathize with or learn from their financial boo-boos. I’ve kept them all anonymous so they could speak freely and be as honest as possible. Hopefully, their blunders can do all of us a little bit of good going forward.

OK, what was your biggest money mistake?

More information here:

Should Doctors Be Organizing and Striking for Better Pay and Work Conditions?

Top 10 Financial Mistakes for New Attendings

You can’t let your mistakes define you and continue to weigh you down financially and emotionally. As Jim has written, you have to admit the miscue, minimize the damage, stop making the mistake, and then let it go.

As he previously wrote:

“The water is under the bridge and the milk is already spilled. If you let your financial mistakes paralyze you, you are likely to make more of them.”

There’s also this: a high income makes up for plenty of mistakes.

So, take it from Bram Stoker (who once said, “We learn from failure, not from success”) and Tallulah Bankhead (“If I had to live my life again, I’d make the same mistakes, only sooner”). You, too, could make all kinds of mistakes in your life and still go on to find the success of a Gothic horror writer or a 1930s movie star (or whatever the financial equivalents of those are).

Remember how high we were riding after Q1 when the WCI Fund (the quasi-index (and completely made up) fund composed of the individual stocks picked by WCICON23 attendees) had beaten the performances of VTSAX and FSKAX? Yeah, that didn’t quite happen in Q2. In track and field parlance, we were like the rabbit/pace-setter for the first lap of the mile run. We ran a great first 400 meters, but we trailed off a little bit in the second lap. Now, everybody else has caught up to and surpassed us.

But it’s OK, because we’re still up on the year. Here's how WCIF compares to VTSAX and FSKAX.

Solid, but not as spectacular as we would have hoped. The S&P 500 dominated in the first half of 2023 with a 14% rise, and the NASDAQ had its best-ever first half of the year with a gargantuan gain of nearly 40%. Meanwhile, WCIF did fine in Q2, but we failed to keep pace with the two most popular total stock market index funds to which we are comparing ourselves.

As a reminder, here’s what’s inside WCIF.

Though artificial intelligence has given a boost to Palantir (which nearly doubled its price from Q1 to Q2) and the New York Times grew its digital subscriptions by hundreds of thousands of people, Disney and Target got pummeled. I’m not sure if that’s the result of the political culture wars that both have had to fight this year, but either way, both companies are some of our lowest performers of Q2.

That’s a little discouraging. Overall, though, we’re feeling good about WCIF—even if not everybody loves this version of the Stock Game.

This is always a good reminder.

Remember when everyone was talking about virtual / augmented reality?

Remember when *that* was supposed to be the next big thing in tech?

If you need reasons *not* to speculate, just look at the graveyard of “next big things”

Invest in value. Don’t speculate in growth.

— Paula Pant (@AffordAnything) July 10, 2023

What were your biggest money mistakes? Can you relate to any of the mistakes made by our WCICON panel? Comment below!

[Editor's Note: For comments, complaints, suggestions, or plaudits, email Josh Katzowitz at [email protected]]