Everybody has messed up at some point. These folks share their biggest goofs, but are now on the right path.
Bought a Vacation Home as an Investment
Christine Flood, 37
"I have been in the rental market since I was in college and thought owning a ski condo would be a good idea. What I didn't know is that vacation rentals are a whole new beast that I didn't understand.
The operational costs differ greatly -- for example, you need to hire a management company for guest services and housekeeping. That's 30% to 50% of your gross rents. And my vacation home is now worth $30,000 less than when I bought it."
My fix: "My dad told me vacation homes are a rich man's game -- I should have believed him. When the market turns around, I am going to sell this baby as quickly as possible and settle with a traditional rental."
Kept Too Much Money in Employer's Stock
Daniel C., 52
Engineer and consultant
Glen Ellyn, Illinois
"I had over 10% of my net worth in a single equity -- my employer's stock, and held on to it even when the market went south. I held on to it out of sentiment because it was my own company. In 2010, $50,000 worth of stock turned into a $27,000 tax loss."
My fix: "I know not to invest with sentimentality, and I pay more attention to my portfolio."
Trusted a Pro's Picks and Ignored Fund Fees
Phyllis Goodman, 63
Fort Worth, Texas
"After retiring, I rolled my 401(k) over to the company that had serviced my insurance needs for more than 30 years and blindly took the agent's recommendations without researching management fees or the funds. I lost money and was charged a great deal."
My fix: "I withdrew the money, started doing research on my own, and invested at Vanguard and T. Rowe Price. I manage my own accounts, insist on diversity, and do everything I can to stay up to date."
Too Risk-Averse for My Age
Sin Hang Lai, 33
Cos Cob, Connecticut
"When I quit my job in 2002, I converted my 401(k) into a IRA at a brokerage and left it in cash for the next seven years. I wish I had invested that money during the strong post-dotcom recovery. It wasn't until after 2008 that I thought about what to do with my savings, and then I stupidly tried to trade and lost money."
My fix: "I regret not having a personal finance education, either formally or through friends and family, so now I read, observe, and carefully manage my own money. I've opened a Roth IRA and an individual account I play with -- I let myself get creative with that account."
Courtesy: Paul Jarvis
Put Short-Term Savings into Growth Stocks
Paul Jarvis, 29
Fargo, North Dakota
"I was 16 when my father passed away nearly 15 years ago. I inherited the house and a life insurance policy, which combined would have been enough for college and hopefully a payment. I followed my broker's advice and invested the life insurance money in a growth portfolio. The market dropped substantially over the next year, and while it eventually came up, I needed the money for tuition and couldn't afford market fluctuations."
My fix: "I think about my short-term needs and balance that with long-term money, which can take additional risk. I rebalance my portfolio in large market declines, as well as cut extraneous expenses and save aggressively."