Investing Mistake #1

My first mistake occured the first time I ever bought a RSP (a 401K for American readers). Great start eh?

I managed to save up some money as a teenager from a part-time job and decided, upon turning 18, that I should start saving some money. As way of back-ground, I was labelled as a child as someone who couldn't save money so this was my attempt to fight this image.

I walked into my local financial institution where I kept my bank account and asked the woman at the investment desk that I wanted to open up a RSP. If you have ever done something similar, the remainder of this story may sound familiar to you:

She took my personal portfolio. I believe I was a "moderate risk" individual. Based on this portfolio she put my into three mutual funds (all owned by the same institution of course) and here's where things get pear shaped as the English would like to say:

1. I was put into a science and technology fund as part of the growth allocation of my portfolio;
2. She put me into a mortgage fund for the "value" allocation of my portfolio; and
3. She put me into a bond fund as the conservative allocation of my portfolio.

Here's the rub:

1. I had no idea what stocks were in these funds;
2. The science and technology fund was at its very height at the time of my purchase. It had nowhere to go but down (any Canadian who owned Nortel in the early 1990's know this story all too well). I laughed the other day when I saw the fund continues to be one of the worse performing funds - over 10 years later;
3. Thank god they were no-load funds but I didn't know what a MER was from a hole in the ground.

So it comes to no surprise that, with the exception of the bond fund, my portfolio went side-ways for years.

With over 10 years of hindsight, I can say I learned the following lessons.

1. Do your research.
2. Don't rely on other to manage your money better than you.
3. Visiting a person behind a counter at your local bank may not be the best way to set up your retirement.

I wish I could say I learned these lessons quickly but you learn from failure one supposes.