4 mistakes I make with my investment portfolio


  • As a newbie investor, I know my portfolio is in a mess. So I asked a financial planner how to clean it up.
  • She said I had too much crypto and should limit it to 3-5% of my wallet.
  • She recommended a 3-fund strategy: a US index fund, an international index fund and a global bond fund.

I first started investing at 32 without a ton of knowledge or a specific plan. I took some of the money in my savings account and invested it in the stock market, choosing companies based on recommendations from friends and my own research.

Now that I’m 34, I’ve begun to realize that my overall investment strategy lacks precision and is perhaps even a bit too risky to support my long-term goal of retiring early as a millionaire. .

That’s why I decided to sit down with financial planner Kelly Klingaman to find out just how messy my investment portfolio really is and what I can do about it. She pointed out a few mistakes I make and how to fix them.

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1. Invest 15-20% of my portfolio in cryptocurrency

It wasn’t until I sat down to audit my financial portfolio that I realized the importance of the share of my cryptocurrency investments.

When I shared this information with Klingaman, I admitted that I had no reason or strategy behind these investments. I just put money into digital coins that looked promising or that other people in my life pushed me to invest in.

Klingaman said this approach was not only risky, but also inconsistent with my long-term goal of retiring early and as a millionaire.

“Cryptocurrency is like having dollars in your wallet,” Klingaman says. “Just because you own one doesn’t mean you’re entitled to more money in the future.”

Klingaman explained that having so much of my money invested in these digital coins can potentially be more risky because you can’t expect a positive return unless you have the ability to predict the future and know which ones to these coins will increase in value over time.

“It’s more of a guessing game that people like to play with cryptocurrency,” she said.

While she didn’t advise me to withdraw my entire crypto stake, she said it made more sense to keep it in a smaller portion of my portfolio, around 3-5%.

2. Investing too little in too many individual stocks

I only recently started investing in the stock market, and as a newbie investor, I didn’t know what I was doing. I shared with Klingaman that I used to invest too little money in too many individual stocks.

Although she said that this error is normal, it can be a strategy that is a big waste of time.

“Even professional fund managers can be bad at stock picking and market timing,” Klingaman says. “They are mostly lucky.”

Instead, she recommends investing your money in broad and diverse vehicles, like mutual funds and exchange-traded funds.

But if you fancy investing in individual stocks, Klingaman said it’s okay to set aside some money that you want to use to do so, but keep it to the minimum of your overall portfolio.

3. Not diversifying the sectors of my investments

When I reviewed my investment portfolio, I noticed that the majority of the companies I invest in are in the technology sector.

Klingaman identified this as a mistake and reminded me that the key to investing is diversification.

“Rather than investing in a single sector and trying to guess which sector will come out on top next, it’s better to spread your money across different companies, countries and categories so you have a better chance of growing your portfolio” , she said. .

Klingaman recommends keeping it simple with a three-fund portfolio that could include a US index fund (so you have exposure to a lot of companies), an international index fund (so you have exposure to lots of countries and emerging markets) , and a global bond fund.

4. Not having a solid strategy

Since I am a relatively new investor, much of my current strategy is based on advice from friends and decisions I have made myself.

Klingaman said that my strategy had better be a bit stricter and recommended that I automate my investment process.

“A good goal is to dedicate 15-20% of your income to saving and investing in order to stay on track with your long-term goals and maintain a stable cash flow in your three-fund portfolio. “, she said.

Although it’s on my to-do list, I haven’t set up automatic deposits to my investment accounts yet. This will hold me accountable each month with a minimum amount of money that I want to add to my investment portfolio.

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