If I Could Go Back, I’d Change These Two Investing Mistakes

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We’ve all made investing mistakes. Sometimes it’s something we did. Other times, it’s something we didn’t do.

In either case, my editor asked me to share one of mine. But to be honest with you, I’ve made two big mistakes that still make me cringe with regret.

Now, don’t worry — neither of these will make you feel sad. I didn’t lose my life savings in Terra Luna or buy REITs in 2008.

Instead, I think your reaction to #1 will be: “Yeah, it’s a bummer, but there’s still time.” Your reaction to #2 will be: “Oh, DUDE, you seriously f***ed up, lol.” That’s the reaction I’ve been getting for ten years, anyways.

So without further ado, please enjoy my ignominious self-flagellation: Here are my two biggest investing mistakes!

The Short Version:

  • My first biggest investing mistake was not having a more liquid, medium-term portfolio of investments between my checking account and my long-term retirement accounts.
  • My second biggest mistake was not investing in Tesla in 2010 after turning in a paper titled “Why Everyone Should Invest in Tesla.”
  • Both mistakes taught me to be less fearful of the markets and to trust my gut on certain speculative investments

1. Not Building a Medium-Term Portfolio Sooner

My first major investing mistake was going 25 years with nothing between my retirement account and my checking account.

I could’ve opened a brokerage account and built a medium-term portfolio full of index funds in about 15 minutes. But I didn’t.

Instead, I spent the first seven years of my adult life with my money sitting in just two places:

  • Locked up where I couldn’t touch it for 40 years, or
  • Getting chiseled away by inflation in my bank account

Now, the reason I didn’t start building a medium-term portfolio sooner is because my retirement plan lulled me into a false sense of security. I distinctly remember the day in June 2013 when HR handed me my intake forms and asked if I wanted to maximize my employer match of 6%.

I said “yes” and immediately felt this misguided sense of victory wash over me. It was like the very Spirit of Adulting herself was whispering words of affirmation in my ear:

“Congrats — you have a dental plan and a 401(k). You’ve won.”

But as I’d later realize, a checking account and a 401(k) are just two-thirds of a basic, successful investing plan. There’s gotta be something in the middle so you can hedge your money against inflation and save up for a house.

Enter the medium-term portfolio. You can build a medium-term portfolio by:

  1. Assessing your risk tolerance.
  2. Choosing a time horizon, which can be the default three to five years or based on your next big purchase (i.e., a house in seven years).
  3. Plugging those numbers into a robo-advisor and setting up regular paycheck contributions.

If I’d only built the most rudimentary medium-term portfolio ever — $10k worth of the Vanguard S&P 500 ETF (VOO) — I’d have an extra $30,000 today.

Oh, well. At least I corrected my mistake and have an excellent, healthy portfolio now.

It still stings.

But not as much as my #1 biggest mistake.

2. Not Taking My Own Advice and Buying TSLA in 2010

Yep, you read that right. I was evangelizing Tesla stock all the way back in 2010 when it was trading at $28.69 a share shortly after its IPO.

Now it’s at $748. It peaked at $1,222 last November.

So, how many $28.69 shares did I buy myself? None. Nada.

I was just a scattered college student, too preoccupied with grades and girls to focus and see the bigger picture — a picture I had painted for myself.

Here’s how my biggest investing gaff started.

In my sophomore year, I was taking Technical Entrepreneurship 201. At the end of the semester, our final big assignment was to take a giant position in a small tech company, justifying our position with technical research and fundamentals.

After researching about a dozen options, I chose a plucky electric sports car startup called Tesla.

Back then, the company only had 899 employees and produced just 147 cars. Furthermore, the recession was not a hot time to make sports cars. Fiat Ferrari Chairman Luca Cordero di Montezemolo called the period “a bloodbath” for automakers, many of whom canceled the development of fun cars outright.

But even still, my research showed surprisingly solid fundamentals backing Tesla:

  • Proprietary tech with widespread applications
  • Leadership with a successful track record for exponential growth
  • Institutional investors took big positions in the company
  • Funding from the Department of Energy
  • A CEO and chief product architect who knew how to market and sell and was a total press magnet

As a car guy, I could also appreciate the stunning technical achievement of the first Tesla Roadster — a car that was 1,000 pounds heavier — but significantly faster than the gas car it was based on.

With all that in mind, I reached a simple conclusion: buy, buy, buy! This stock is truly going to the moon.

I got an A on the assignment.

My professor pulled me aside after class one day to encourage me to follow my own advice. I made a mental note to buy TSLA before graduation as soon as I had some money.

But just like 99% of my mental notes in college, it was soon lost in the mental clutter of student life.

Years later, I was passing through Nashville, so I decided to ask my professor out to lunch. To save him from potential embarrassment, I prefaced by saying, “You might not remember me, but…” and shared my LinkedIn profile.

Here’s how he responded:

He’s not the only one who’s never let me live that one down.

But to be honest, I think I learned more by not investing in Tesla when I could have.

If you’ve done the research — and you can afford to be wrong — don’t wait. Making speculative investments that fit your risk tolerance is totally OK.

Case in point, my great Tesla gaff inspired me to curate a highly speculative “YOLO” fund consisting of 5% of my overall portfolio.

At present, my crypto-heavy YOLO fund is actually outperforming my main fund by 500%. If you’re curious to hear more about how I built it (and why I won’t put in a penny more), check out Here’s Why I Won’t Buy Any More Crypto (Even Though I’m Way Up).

The Bottom Line

My two biggest investing mistakes taught me to be focused and fearless, respectively. I should have set up a medium-term portfolio instead of getting distracted by college life, and I should have bought those Tesla shares when I had the opportunity.

What was your biggest investing mistake, and what did you learn? Let me know in the comments!

Further reading:

Chris Butsch

Chris helps young people prosper - both mentally and financially. In addition to publishing personal finance advice for Investor Junkie and Money Under 30, Chris speaks on the topics of positive psychology and leadership through CAMPUSPEAK and sits on the advisory board of the Blockchain Chamber of Commerce.

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