I'm in my 30s now, though I'm still not used to saying that. My 20s went by too fast, and while I accomplished a lot, both personally and financially, I also made some mistakes, especially when it came to investing.
Here are some of my biggest investing wins and losses from my first decade in the workforce. Hopefully, you can learn from the good and avoid the bad.
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3 smart investing moves I made in my 20s
Some of the best investing decisions I made were:
1. Opening a retirement account at 20
I opened my first retirement account when I was 20, and while I wasn't always able to contribute as much as I would've liked, I managed to put some money away in most years. I'm really glad I did this because those contributions will have four decades to grow before I need to withdraw them for retirement. I should end up with a lot of earnings from this, and that will reduce how much of my own savings I'll need to put aside for retirement.
Today, I continue to make retirement savings a priority, second only to my monthly bills, so I can build on the foundation I began over a decade ago.
2. Not taking early withdrawals
I spent a lot of money in my 20s on a house, major renovations, and a wedding, among other things. When I didn't have the cash on hand to cover those expenses on my own, I turned to loans rather than tapping my retirement savings.
I didn't want to deal with the penalties that came with accessing my retirement funds early, but more importantly, I didn't want to set myself back when it came to retirement savings. If I had, I'd have to save a lot more per month to retire when I want.
3. Automating my contributions
Whenever possible, I prefer to automate my retirement contributions so I don't forget to make them. In the past, I was able to do so through workplace retirement accounts. But now as a freelancer, my income fluctuates, so these don't work as well. Instead, I leave notes for myself so I don't forget to set aside money.
I do still use automatic contributions for investments that I keep outside my retirement account. This saves me a lot of time, and it enables me to avoid checking my portfolio every day. When I'm not seeing the daily ups and downs, I'm less likely to get stressed about short-term losses.
2 investing moves I really regret making in my 20s
I've learned a lot over the last decade, and unfortunately, I had to learn not to do these things the hard way:
1. Investing in things I didn't understand
There were a few times when I invested in something just because I knew friends and family who were really excited about it. Instead of digging in to decide if it was a smart investment for me, I took their word for it and I paid the price.
Part of the reason for that was because I assumed investing was more complicated than it is. I trusted people who seemed like they knew what they were doing because I didn't think I could pick smart investments for myself.
Now I've learned that it's not really as difficult as I used to think, and that confidence has helped me keep a level head when I hear about the most recent stock and crypto crazes. I take my time and research investments before sinking my money into them.
2. Trying to time the market
Not understanding some of my investments left me unsure of what to do with them. I didn't have a good grasp of their long-term potential, and so I didn't know if buying or selling was smart. As a result, I would sometimes buy or sell based on a stock's recent performance and what others were saying, and that didn't work out.
Now, I stick to dollar-cost averaging with my investments. I may not always score the best deal, but I can at least feel confident that I'm paying a fair price over time. And this strategy, coupled with automatic contributions, frees me from having to check my portfolio too often.
As I make my way through my 30s, I'm sure I'll continue to make mistakes. That's just part of investing. But I try to take what I've learned from the above wins and losses and do a little better every year. At the end of the day, that's all anyone can ask from themselves.
