Oct

8

my least bad and least good financial decisions

Filed Under retirement 

This is part of the m-network’s day of posts on our best and worst financial decisions. Both my best and worst decisions are related to pensions.

best decision

I started pension (retirement) fund contributions as soon as I started work and I’ve consistently invested them in index funds.

Why is this my best decision?

  • Starting earlier is always better than starting later.
  • The company I work for contributes double whatever I contribute up to a certain limit.
  • Index funds match my keep it simple and average philosophy.
  • I now stand a fighting chance of not being desitute in my old age.
  • I’ve never had the money, so I don’t miss it.

worst decision

I invested my non-work related pension (retirement) funds in the Virgin Money Stakeholder Pension.

Why is this my worst decision?

  • They charge a 1% fee, whilst the best provider of index funds in a pension following the same index charges 0.3%
  • I don’t have enough money invested to transfer out of this fund
  • I didn’t shop around before investing, I was sold on the advertising
  • Its difficult to get a valuation from Virgin, for some reason their system won’t let me register for online access.

I know this isn’t a really bad decision. That’s because most of my financial errors, haven’t been decisions but simply forgetting things, like:

  • how close I am to my overdraft limit
  • when the due date is on the credit card
  • getting work expenses reimbursed
  • cancelling subscriptions I no longer need

Really, I’m lazy and I procrastinate. I’m not a great decider - most of my decisions are in the ok to good range, but my non-decisions are pretty terrible.

Check out the rest of the m-networks best and worst decisions:

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Comments

9 Responses to “my least bad and least good financial decisions”

  1. Lynnae @ Being Frugal on October 8th, 2007 5:57 pm

    Great post! I sure wish we had started investing in retirement a lot sooner. It’s great that you’ve been investing since you started working!

  2. CHESSNOID on October 9th, 2007 4:06 am

    Good honest post. I like your assessment. Everyone can learn from both.

  3. Raymond on October 9th, 2007 4:25 am

    The power of compound interest - I’ve learned the importance of starting as early as possible too.

  4. Bob Smith on October 9th, 2007 5:29 am

    “Index funds match my keep it simple and average philosophy.”

    You have one thing right - index funds are simple. However, they are NOT average. They are much better than average. And if you use a low-cost company, like Vanguard, they’re even better.

  5. Patrick on October 9th, 2007 11:38 pm

    Great job on your best choice. I started young also, but it was more like you worst decision - I invested in a fund with a lot of fees. I learned from it though and quickly transferred my money out of there!

    And if that is your worst money decision, I think you’re doing all right! ;)

  6. plonkee on October 10th, 2007 8:35 pm

    I’m glad to see I’m not the only one whose made this particular mistake. Ah well, onwards and upwards.

  7. ispf on October 13th, 2007 5:13 pm

    My best decision has been to invest in my pension (in my case 401K) as well. However, unlike you I started quite late (since I spent a lot of time in school being totally ignorant of personal finance basics). I try to make up being very aggressive in my contributions. Well, better late than never I guess!

  8. Money Advice on April 12th, 2008 8:02 am

    Thanks for putting up this article and it is really nice to hear that nothing works without planning properly and investing in a retirement scheme is an excellent decision.

  9. Lisa on April 14th, 2008 12:23 am

    Sounds like you’ve made some good financial decisions. I only wish I had starting putting aside money for retirement earlier. I would be much better off at this point.

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