2024 and the past year is ending with the stock market at all time highs yet again, and guess who HASN’T finished with the same gain in their investments? If you guessed me, then you are right. I unintentionally sabotaged my stock market gains by acting against my best interests, and breaking a few key rules. To be honest, every mistake that you can make when investing for the long haul happened in the past year. I cannot help but feel a little shame when I reflect on the fact that I would have at least 3% more in gains if I just left my holdings alone. So What is my overall gain against the S&P 500? The S&P 500 finished with a total gain of 23.84% last year, while my portfolio finished at a little more than 20% over the year. While that may seem like it’s not that much, my total dollar amount lost is around $3,600 and the compounding potential over the next decade is $9,745. In this current economy every penny counts! So how did I finish below the market finish in December? I made 3 key mistakes.
I hopped in and out of individual “hyped” stocks
There are a few speculative stocks that always make headlines, and they had my head turning! My biggest mistake was buying into certain positions based on the online hype. As you may know, Palantir was always making headlines. It was so popular that people in my community even started discussing it. Eventually I sold off some of my VOO position and entered a PLTR position. To my dismay there was a bit of a drop and I sold out once I gained some clarity. Another position that I always seem to fall for is QYLD. Because it pays a dividend monthly, and the barrier to entry is extremely low (never more than $20), I have a bad habit of thinking I can dump thousands in there and use the dividend to pay my bills (I know its foolish!). The lesson here is that if I had not exited my large position in VOO, I would have been that much closer to 23% gain over the year. Now I have extra tax documents to file, and losses in my trade history.
I funded and unfunded my Individual Brokerage to pay off debt
I’ve been known to take money out of my individual brokerage whenever I am in need. 2024 and this year was no different in that regard. I was on a mission to pay off all student loans for my husband and myself. The highest that I’ve ever been able to grow my investments in that account was around $19,000. This was when federal student loans were on pause during the global health crisis from 2021 to 2023. When it became clear that my student loans wouldn’t be forgiven, I immediately withdrew the $19,000 that I has accumulated over the past 2 years and threw it at my debt. This brought the principal balance from $23,000 to $4,000. I officially became debt-free last May, with my husband becoming debt free in August. I don’t regret emptying my individual brokerage account because being debt-free feels amazing, but had I not sold out of those positions, who knows how much I would be sitting on today. I’d rather not think about it!
I failed to invest any post-tax dollars
I committed one of the biggest sins in the investing world, and that is to not participate at all! Okay, in all honesty, I was still automatically contributing 8% into my employee held 401K, which only reinforces the importance of automating your savings! With that being said, my salary allows for an extra $2,000 minimum invested after all expenses are handled monthly. So why was none of that invested? Simple: I focused on funding a hefty $30,000 emergency fund, and used the remainder to pay off my student loans. For what it’s worth, that is the ONLY thing that would ever stop me from investing excess money earned. Now that I no longer have the Department of Education, or Nelnet in my financial business, I look forward to catching up with missed contributions from the past year.
So what will 2026 look like for my finances? I am making a vow to focus on 3 key financial behaviors to catch up my net-worth growth:
- I want to stay out of debt. I will be very particular with how I use my credit. Having debt is what kept me from investing in an individual brokerage anyway, so let’s avoid that going forward!
- Slow down on emergency saving. This is me acting in fear. I have a pretty hefty emergency fund, and no matter how much I store away, it never feels like enough security.
- prioritize investing the difference. The difference meaning what is left after my budgeted expenses are accounted for. I see the most growth when I throw money into the S&P500, not my high yield savings account.
