My Past Experience with Investing
Update, The Pension Plan is Dead,
Not really news to anyone because by this point the death of the Pension plan has been well documented. The funny thing about this is that until recently I never knew what a pension plan was and I never expected to have a job that entitled me to one. You could lump it in there with Social Security as a safety net my grandparents are living on that I will never see.
I was taught that the money you lived on in retirement was the result of the money you saved during your working years. I actually started investing fairly early in life, putting a few thousand dollars from my summer job into a mutual fund in late 90′s. The thought was good but as with most things the devil is in the details.
You can guess the rest of the story, lost most of it with the burst of the dot-com bubble and was left with the $800 or so I have still invested. I have not added to this original investment nor have I managed it. It has sat in the same high expense, poorly managed “aggressive growth” fund that I originally invested in as a reminder of what happens when you don’t do your homework.
Retrospectively I was pretty much set up for failure:
- I was not diversified at all. 100% of my money was in stocks, in a single mutual fund classified as “aggressive growth” (read, lots of Dot-com stocks)
- My costs were too high. The mutual fund I was in had a high expense ratio and on top of that, shortly after the bubble burst I didn’t have enough money to meet the minimum balance so I was being charged a low balance fee.
I was fortunate to be young with only one summer lost and not on the verge of retirement with a lifetime of earnings on the line. I hope to build on this experience as I begin investing for my future once again. I am slightly concerned however because the stock market is again at an all time high. Lets hope history does not repeat itself.
