A recent survey conducted by banking Goliath Wells Fargo has shed new light on what's on the minds of the wealthiest investors, including insight into their biggest money regrets. The survey questioned 1,983 respondents with $250,000 or more in investable assets. These wealthy investors wished they'd made better investing decisions, saved more and spent less, and stopped to smell the roses along the way to amassing their nest eggs.
Avoiding mistakes along the way
You may think that investing is easy, but wealthy investors might disagree. According to those surveyed, the single biggest regret for those with six-figure portfolios is not having done a better job making investment decisions. That's pretty understandable when we consider that many of these investors built their investment portfolios during the Internet boom and bust and the housing bubble pop and drop.
But because it's understandable doesn't mean that there aren't steps you can take to minimize this same regret from haunting you down the road. Here are some ways that you can limit the impact of bad investing decisions on your portfolio.
- Invest in what you know, rather than in fly-by-night hot stocks with complicated business plans.
- Focus on building a long-term portfolio rather than one for the short term.
- Invest continuously and consistently rather than in sporadic lump sums that may or may not be timely.
- Spend more time researching companies, sectors, industries, and the economy so that you understand the risks and rewards associated with unavoidable economic booms and busts.
Making better financial choices
Although wealthy investors have built up substantial portfolios, many realize that if they'd started investing earlier and made better decisions on spending, they'd have an even bigger stash set aside for their golden years.
Thanks to the power of compounding interest -- the ability to earn interest on an investment and then earn interest on that interest over time -- investing when you're young can result in a huge difference in your portfolio value as you age.
Consider this point: Investing $500 per month in a hypothetical investment with a 5% annual return over a forty-year period results in a portfolio worth $725,000; however, investing that amount over a 20-year period would net you less than $200,000!
Because investing early can make such a big impact on your financial future, it's little wonder why affluent investors wish they'd been more frugal so that they could set aside more money sooner.
All work and no play...
Fifteen percent of wealthy investors wish they'd stopped to smell the roses a bit more along the way so that they could enjoy their money more. Although hard work can lead to financial success, taking time to recoup and rejuvenate can lead to a healthier and happier life.
One way to do that is to spend less money on material things and more money on experiential things, such as vacations. People who spend their money on experiences rather than goods get the most long-lasting enjoyment. That suggests that taking a family trip is, in the long run, more rewarding than buying a fancy car.
Interestingly, taking time to enjoy your money in this manner may also be a good investment. Research from Project: Time Off shows that people who take more vacation time tend to get promotions and make more money, too.
Tying it together
Every investor is bound to have money regrets down the road, but minimizing those regrets could help you amass a larger portfolio and live a happier lifestyle. Although there's no guarantee that following this advice will lead to riches, it's likely a good place to start.