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Learning to Invest / My Dumbest Investment


Subject:  Cap Preservation - commissions, fin planning fee Date:  10/12/2006  4:42 PM
Author:  yattaboy Number:  2320 of 4155

First, congrat's to anyone willing to tell the world what they've done wrong. That's the first step to improving your investment abilities!

I will focus not on specific stocks, but other ways of wasting your hard earned money.

Warren Buffet recently estimated that ~35% of all profits earned by investors, traders, speculators, etc are squandered to fees. I could have written that same piece of advice.

Scenario 1 - Mutual Fund Fees

When I first delved into mutual funds in the early 1990's, I had picked some pretty good mid-cap growth/dividend funds on my own for my IRA, but couldn't help noticing the big, financial firm down the street with a highly recognizable blue logo, who's first name begins with Merrill. Convinced I was missing out, I eventually swapped most of my funds into a newly created IRA with them, happily paying the front-end fees for a bunch of funds I knew nothing about but whom my advisor, a friendly guy about my age, seemed so positive about.

Long story short: By summer of 2002, I had lost approx 50% of the value I put into my IRA, and had paid front end fees for the pleasure of doing so. I compared the NAV price at that time for the funds I had initially