Beginner Investing Mistakes You Need To Know To Avoid Losing Thousands

 

 

**This is a transcription of the Millennial Life Admin Podcast: Episode 5**

Oh my goodness I have made so many investing mistakes in the stock market is actually laughable.

And today I’m going to be sharing all those terrible investing mistakes. The title of this article is not exaggerating, these are investing mistakes that you need to know to avoid losing thousands. 

If you do listen to this episode, you’ll notice that I sound very cheerful as I talk about some of my most embarrassing mistakes and it’s not because I’m happy that I made them, I’m just so excited to finally share them to stop you from making the same investing mistakes and that I finally get to speak my shame when it comes to investing. 

In this episode, I’m going to be using a personal growth tool of This is a personal growth tool that I will be using in this episode and it comes from Brene Brown who is a research professor and author of the book Daring Greatly. She talks about speaking and listening to shame as a way to release it into the world and developing shame resilience as a really powerful personal development tool. I won’t go too much into a tangent here but it’s basically the idea that shame has a huge impact on our lives and by being able to develop shame resilience, we are better able to connect with others and pursue our potential. 

But in today’s episode, I’m going to be walking you through the my big 5 investing mistakes. And these are not super complex mistakes, they are actually super simple investing mistakes. Investing can be as complicated as you make it, so I hope you find this either helpful or at the very least entertaining when it comes to my mistakes. 

Before we start, I do want to give you some background information on the type of accounts I currently have open. I have a TD Direct Investing Account, a WealthSimple RoboAdvising Account, and I recently opened a WealthSimple Trade account. In the past, I’ve also had a WealthBar account, and Mylo account which I won’t be talking about in this episode. I experimented once to see which trade accounts were best for me – let me know if that’s something you’re interested in listening to! 

I started investing in 2018. While creating this episode I realized that I started investing at the same time I was saving for an emergency fund, which is not what you’re supposed to do. I didn’t talk about it in Episode 2 about my emergency fund because I was too embarrassed and had repressed my mistake, but we will be talking about it today. 

I also have investments in retirement but another story for another day. So let’s just get started! These are the 5 huge mistakes I made when it came to investing. 

 

Investing Mistake #1: I was paying hella high fees.

The first mistake I made when it came to investing was not doing my research into account fees and paying hella high fees. 

Fees vary from financial institution to institution, but I was basically paying the highest fees out there. 

This is going to sound ridiculous but not only was I paying $10/transaction in my TD account, but I also had to pay $25 every quarter to keep the account OPEN. 

That means that even if I did absolutely NOTHING with the account, no trading, no buying, I still owed TD $100. Is that not insane?! LOL And I thought that was NORMAL. 

One of the best things I did last month for myself was I enrolled in an Investment Boot Camp. There, I really learned all of the options out there and this was the highest fee out there. Literally, I chose the bank with the highest fees. 

Of course, all big bank has fees, but I think RBC and BMO were charging $9 or less, and I had to just choose the bank with the highest fees, because, like many of us, I chose what I was familiar with. 

TD was actually the first bank I opened when I was 15 years old, and I chose it because my parents banked there. I still have my TD account for many reasons, but I’ve switched my main banking to Tangerine because after I finished school, TD started charging me ludicrous fees to keep my account open. I think I was paying $10-$15/month just for the “privilege” of having an account open. In 2016, my best friend referred me to Tangerine Bank (Get $50 free by signing up with my Orange Key: 44592405S1!)and switching to a credit union was one of the best things I’ve ever done. If you’re interested in the difference between a big bank and credit union, read more about it here. For now, I don’t want to go on too much of a tangent, but I think that’s a natural part of personal finance, you go where you know. And because Tangerine didn’t have trading options at that time, I went with TD.

However, when it comes to investing and banking, it always pays to do your research. And during the Investment Boot Camp, I learned about more options like QuestTrade and WealthSimple Trade that allow you to either trade FOR FREE or at a very discounted rate! f you’re interested in trading, I highly recommend you check these options or research other options depending on where you live. 

I cannot believe I was paying such high account fees and transaction fees. And if that wasn’t bad enough, I also didn’t open up the right accounts to invest in. I chose not to invest in my TFSA (Tax-Free Savings Account) and opened up a personal account instead. So even if I do make a bit of money on investing, I’m TAXED on it. After I learned more about investing, I realized that my mistakes just keep getting worse and worse.

 

Investing Mistake #2: I bought stocks on a hot tip. 

The next mistake I made and this is truly embarrassing one the one that I’ve been kind of hiding from everyone and that is I bought stocks on a hot tip. I went into investing and the stock market with a lot of greed and just a very short-term mindset, which is not how you should walk into investing. 

I mean I still was looking to invest for years, because I didn’t need the money anytime soon, but I walked in thinking I would make “quick” money by buying cannabis stock. 

I bought cannabis stock so at the end of December in 2017 cannabis stocks shot through the roof in Canada. For anyone who doesn’t know cannabis wasn’t legal in Canada and didn’t go through the full legalization process until October 2018.

Of course, that year before the legalization, the industries started to develop and cannabis stock shot up in December. And I decided that I wanted to get involved in that and that this would be the perfect time to start investing. Oh my gosh, no it wasn’t.

So in January 2018, I opened my account and I bought cannabis stocks with the intent really just making lots of money I thought “oh my gosh, I’m going to make so much money from this because everyone else is I’m saying that it’s so great” and that’s one of the biggest mistakes I’ve learned not to make: don’t buy stocks on a hot tip.

And I don’t blame the person that suggested this to me or anyone else. Opening the investment account when I didn’t know what I was doing, buying stocks to try to “get rich quick,” these were all 100% my decisions. I had full control of it and I really just let my ego, pride and greed get the better of me in making those choices instead of really sitting down and thinking “hey you don’t know anything about investing maybe you should do a little bit more research.”

And that’s actually one of the reasons why I kind of rushed into the process without thinking it through when I opened up my TD investing account. I already had a TD account so I didn’t even bother looking anywhere else because I wanted to take this hot tip and get into investing as fast as possible.  

So that was a really big mistake I made, don’t invest in hot tips. Take your time in choosing your investments, because investing is a long term endeavour and if you try to time it, you might get burned (like me). I didn’t really know much about investing or the cannabis industry, which leads to my next mistake which was….

 

Investing Mistake #3: I didn’t follow up or do the research in individual stocks.

The third mistake I made was I didn’t do any research in the individual stocks or the industry and I have no interest in it. So really, I only went into investing because I thought I was going to make money and I really wasn’t that interested in cannabis. I have nothing against the market or industry or anyone who uses cannabis or anything but I don’t use cannabis and I don’t really know that much about the product or the market.

After I bought my stocks in the Cannabis Industry and the next day, they absolutely tanked. I swear I felt like I was a stock jinx for a while there because I was literally never in the green with those stocks. I didn’t even bet to ride the high one day and think “I’m doing so well,” because the very next day one of my stocks went through a merger and the other one wen through a restructure. Literally one of the stocks got cut in half overnight. I don’t even really understand what happened because I went into not understanding much. 

And that big mistake really cost me. I had no real interest in learning more about the Cannabis industry keeping up with the news of who’s doing what and at what time.

I think this kind of ties into mistake #2 (buying stocks on a hot tip) because this I shouldn’t have entered into a market that was so volatile, I knew nothing about, and I had no interest in 

If you’re someone who wants to buy individual stocks (and there are other options I will talk about), it’s sometimes easier just to buy what you know. For example, I probably would have been smarter to buy Apple stock. While I wouldn’t consider myself a tech genius, I do keep up with the releases because I have an iPhone, Macbook, and iPad. I’m a big Apple consumer and at the very least, I would be investing in something I Knew instead of cannabis.

Buying cannabis stock for me was a complete gamble that didn’t pay off. Looking back on it, it was so risky to buy stock in an industry that I had no knowledge of and that had no history. 

I told myself, don’t worry, things will get better in October when it is legalized in October but for many reasons, it didn’t go up (cannabis is still legal in Canada).

By the way, something I’ve also learned along the way is that if you buy stocks on a hot tip, it’s probably not that hot. If everyone’s already talking about it, that’s kind of like when it’s too late and it’s about to go on the down. It’s best not to time markets, because rarely anyone gets it right, so that’s why it’s important to buy into things you want to be invested in. Because if you buy a stock on a hot tip because it’s already shot up, there might not be much potential left. That was me, I was that person and bought it at its absolute peak. Don’t be that person. 

I ended up losing thousands (when I completely sell) and moving forward, I’m going to only buy industries that I’m interested in, if I choose to buy individual stocks. Which leads me into tip #4 about different options when it comes to investing…

 

Investing Mistake #4: I discounted the value of robo-advising and ETFs. 

Now, the 4th mistake I made when it came to investing is I discounted the value of Robo advising and ETFs. For anyone who doesn’t know, robo advising is basically when you let a digital platform, like WealthSimple or WealthBar, invest in a premade portfolio based on your needs and goals. It’s pretty simple, you take a quiz based on your current assets, goals, risk tolerance, etc. and they invest for you. It’s a passive form of investing because you let someone else do the work and they mostly invest in ETFs (Exchange Traded Funds which are like a collection of stocks) and they take a small management fee. 

If I could start over, I really wished I would have started with robo-advising. I currently have a Wealthsimple Trade and a WealthSimple roboadvisor account and I think it’s such a great way to get started. Even with the quiz at the beginning, they asked a lot of questions that I should have asked myself like how long do I want to be investing for, what are my goals, and what is my risk level? 

But what I really love about WealthSimple and WealthBar is that you can invest with less risk. You can dip your toes into investing without as much volatility and take the time to learn it properly. They also DO NOT come with account fees! So there’s no risk in opening one. The reason I like WealthSimple more than WealthBar right now is because WealthBar requires a minimum of $1000 to start trading (and so does QuestTrade). But with WealthSimple, you can get started with $100 and if you don’t like it, you can just take your gains or losses and leave. There are no account fees to keep it open or transaction fees. They do take a management fee on your earnings though so make sure you do your research. 

I joined WealthSimple on a referral code (from my best friend who has clearly always been looking out for my best interest) so I get the first $10,000 managed for free for the first year. I’m still within that time frame and bracket, so I will provide an update, but so far, I’m really liking it. If you’re interested in the referral, it is here, but what I really want you to take away from this is the importance of doing your research and understanding different levels of investing because that’s something I didn’t do. 

I really wish I didn’t discount robadvising earlier. I used to think that, if I have a roboadvisor that’s not making me quick money, what’s the point? Well actually the point is that it’s a great beginner strategy to start investing and give myself the opportunity to learn more instead of rushing into it all at once. It’s something I really wish I did sooner. 

 

Investing Mistake #5: I didn’t ask questions.

The final mistake I made when it came to investing is I just didn’t ask any questions. I think I was so embarrassed by my mistakes that I didn’t want to tell anybody about them, because it felt very shameful. So I kind of just kept my secret hot tip cannabis stocks in the back of my personal finance portfolio and didn’t tell anybody what was going on because I didn’t want to be judged for it.I didn’t want to ask questions because I didn’t want to look stupid and that actually was probably the biggest mistake that I could have had made.

I should have asked questions about account fees, the industries, and what options were right for me. As I mentioned earlier in this episode, and I talked more about in episode 4, in April, I enrolled in an Investing Boot Camp. And not only was that such a great decision because it allowed me to learn more about the options out there, but it was also a place I could ask questions. 

I know I’ve kind of dragged TD a little in this episode, but it really wasn’t really their fault. The reason TD has high account and transaction fees is because it also gives you access to their personal advisors. I really should have sat down with a TD advisor and talked more about my options instead of going into it blindly and to buy cannabis stocks because I’m going to I want to make lots of money. lf I had spoken financial advisor, they probably would have deterred me from that path and said hey you know what it’s okay if you’re interested in cannabis stocks but it’s a really volatile market we don’t know what’s going to happen. So maybe you invest mostly in ETFs or mutual funds and have cannabis stocks a small part of your portfolio and really create balance. I should have asked more questions so I don’t blame TD but really, $25/quarter is a pretty high account fee. You get what you pay for and I chose not to take the resources I had paid for. 

And the last place that I didn’t ask questions, was to myself. I never really evaluated my goals when it came to investing, I just wanted to make money. But with the Boot Camp and actually with robo-advising, they ask a ton of questions of what you actually want to do, so now I ask myself investing questions, along with others. 

Looking back, this was the worst decision I made. It’s okay not to know everything, no one does naturally, but it’s more important to ask questions. 

So that’s it, those were my 5 big investing mistakes that I truly hope that you don’t make. I’m so glad I made this episode because so many people have asked me about investing, and I never really wanted to share anything because I was embarrassed by my own mistakes. 

But I personally love it when people talk about their mistakes and what they’ve learned from it because as cheesy as it sounds, we learn more from mistakes than failures. And I this has actually been the easiest episode for me to record because I can now let it be free. After I publish this, everyone will know my mistakes and it’s not the end of the world.

So if you’ve ever made a financial mistake, know that it’s not the end of the world. It’s been actually quite cathartic to talk about it and I hope in sharing my embarrassing mistakes, you are reminded that we all make mistakes. If you’ve made a mistake, please share it with me – you can always find me on Instagram @millenniallifeadmin. 

Thanks again for tuning into this episode, until next time, happy saving and spending! 

Author: Kimberly

Hi there! My name is Kimberly and I created MLA as a personal development, career, and finance resource for millennials. MLA focuses on helping career-driven millennials create the personal development habits to achieve work-life balance and manage their money. Throughout this blog, you’ll find articles that give specific and detailed advice because I’m not into the fluffy advice. There’s plenty of that on the internet. Here you will find tangible advice on how to find a rewarding career (that you love!), where you can help others, and learn how to save and invest your money for the future. I hope you’ll follow along!

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