We all know that some of our mistakes can be costly. In dim light, if you don't realize you're lighting your cigar with a $100 bill instead of a $1 one, you'll be out $99. If we fail to replace a roof in time, we can end up with massive water damage in our house.

Some mistakes cost more than others. Our friends at Consumer Reports magazine recently listed some blunders that can cost you lots of money. Here are a few:

  • Investing too conservatively during retirement. They looked at a range of 20- and 35-year periods between 1940 and 2006, and found that "an all-stock portfolio provided [a hypothetical investor with $500,000 to invest at age 65] $750,000 more than an all-bond one." You might think that it's risky to invest in stocks during your retirement, but remember that even at age 70, you may well have another 20 years to live and invest, and that the portion of your money that you won't touch for at least five to 10 years may flourish in stocks. You needn't put it all in stocks, but consider tapping stocks as much as your comfort level permits.
  • Launching a divorce war. This topic isn't often addressed in financial forums, but it's worth examining. Divorces tend to involve lots of heated discussions, along with some psychological warfare. All of this can wreak emotional -- and financial -- havoc on your life. If you're both paying lawyers several hundred dollars per hour, the cost of a divorce can easily top $100,000. Do you really want to pay that to lawyers instead of keeping most of it for yourselves? Look into mediation services, and try to come to some agreements together peacefully, too. That can save time, money, and headaches.
  • Other mistakes mentioned in the magazine included retiring before you need to (which can cost you several hundred thousand dollars), overpaying for your mortgage (get tips in our Home Center), and underinsuring your home (which can cause big trouble if disaster strikes -- learn more in our Insurance Center).

More mistakes
Here are some more costly mistakes that I can think of (unfortunately, that's because I've made so many such mistakes):

  • Selecting stocks irresponsibly. I know there's no guarantee that by doing your due diligence into any potential investments, you'll unearth the next spectacular performer. But if you're prone to snapping up shares of penny stocks thanks to hot stock tips you gathered in an elevator or an email full of misspelled words, your chances of doing well will be slim. Such "investors" would probably not have bought into Target (NYSE: TGT) in 1998 (tripling their money since then), or Procter & Gamble (NYSE: PG) in 1988 (increasing their investment's value nearly 20 times over since then), or Boeing (NYSE: BA) in 1993 (seeing their money grow more than six-fold).
  • Ignoring the power of dividends. You don't have to find companies whose revenues are growing astronomically in order to do well. There are lots of solid, consistent growers that also up their dividend regularly, and significantly.



5-Year Average Dividend Growth Rate

10-Year Average Annual Return

T. Rowe Price (Nasdaq: TROW)



Nucor (NYSE: NUE)



Sysco (NYSE: SYY)



Nike (NYSE: NKE)



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Keep mistakes such as those above in mind as you make financial decisions. And remember that not doing something sometimes (such as not contributing to your Roth IRA in time) is a financial decision -- and one with consequences.