All investors make mistakes from time to time, and I'm no exception. I've lost money and missed opportunities to maximize my savings growth on multiple occasions. I'm not proud of it, but I've learned a lot as a result of these costly errors.
Here are three I never plan to repeat -- and hopefully you won't either.
1. Not contributing to my retirement account regularly
I opened my first retirement account when I was 20 years old, but there were several years I didn't contribute much, if anything, to it. I didn't have a ton of cash to spare back then, and retirement seemed pretty far away, so I didn't think skipping a few years would make a difference.
Now, a decade later, I really wish I'd consistently put money away for retirement in my 20s. I understand now that those early contributions are some of the most important for my retirement. They're going to be invested the longest, so they can grow much more than contributions I've made more recently.
Fortunately, I learned from this mistake while I was still fairly young. Now, I make retirement contributions a high priority. I try to save at least 15% of my annual income each year, and I set reminders to myself to make contributions monthly so I don't forget.
2. Investing in things I didn't understand
I bought some cryptocurrency during the 2017 boom without knowing too much about it. I had relatives who had made quite a bit of money trading crypto at the time, and like many others, I decided to try to cash in before prices went even higher.
While I did make a small profit, my limited crypto knowledge definitely hampered me. There were times when I bought coins while prices were high, only to watch them fall the next day. And sometimes I sold some when I could've made more money by holding onto them. Those errors may not have happened if I'd understood what I had and what was driving the extreme volatility. But as it was, I was often making decisions in response to the coins' recent performance.
Since then, I've learned that I can do a lot better by taking the time to understand my investments and focusing on their long-term growth potential. I tend to be wary of stocks that skyrocket overnight, like meme stocks, and do my best to tune out a lot of the internet hype.
3. Not paying enough attention to investment fees
I didn't think much about investment fees when I first started investing, especially since they came directly out of my account. As a result, I can't be sure how much I paid in investment fees over the years or how much I could've saved if I'd focused on low-cost investments from the start.
Before I invest in anything today, I make sure to look into the fees associated with it, and I try to keep these as low as possible so I can hold on to more of my earnings. One of the best ways to do this is investing in index funds. These bundles of stocks mimic the performance of a market index, and they instantly diversify your savings. They're also known for being really affordable. The best S&P 500 index funds only charge you about $3 per year for every $10,000 you have invested in the fund.
I can't go back and undo the investment mistakes I've made so far, but I can use what I've learned to ensure they never happen again. In addition to taking these steps, I also review my investments each year and look for opportunities to improve my portfolio's performance. That doesn't mean I'll never make any investing mistakes again, but I at least feel confident that I'll continue to improve over time.