10 Years of Investing Has Taught Me 15 Lessons

I began investing in equities through my company’s retirement plan a little more than ten years ago. These dollars were initially like tiny drops dripping into a bucket. They didn’t seem to be doing much, but each pay cycle added a little more to the bucket. After a decade, this bucket, along with Tatiana’s equally sized bucket, is nearly large enough to declare us financially independent.

My investing journey began when I contributed enough to receive the 401(k) plan’s 4 percent employer match. Even though the company would not begin matching my contributions until a year after my hire date, I began contributing right away. Why would I contribute immediately if there was no match? I acted quickly because I didn’t want to get used to the extra money. I expected it to be much more difficult to adjust to a lower take-home pay later.

In retrospect, the 4% savings didn’t reduce the paycheck significantly because the money was pretax, but there’s always an excuse not to save. That is why, in overspending households, saving should come first, and it should run on autopilot.

Savings rates and retirement

If you want to become financially independent, the most important action you can take is to pay yourself first. In this country, few people do this, and as a result, we suck at saving. For the past five years, our national personal savings rate has hovered around 5%. Why should we be concerned about such a low figure?

Because your savings rate determines when you can retire. You can expect to work for a very long time if you save at a low rate. With a 5% savings rate, retiring would take 62 years! (You can use this calculator to see how much time you have until retirement.) So increase your savings rate to avoid becoming one of those haters who despise others who have the option to retire early. 🙂

Looking back to my pre-FI days, it would have taken me up to 39 years to retire with the employer contribution and my 4% contribution! There is nothing sexy about that. I didn’t learn about FIRE until later, so I thought I was doing well by contributing the bare minimum at the time. I even thought I could work a 9-5 job until I was in my sixties. What on earth was I thinking?

Saving money was not always a top priority

If I had had the mindset I have now at least ten years ago, I could have retired by now, but I was caught up in the same nonsense as the average American. I wasn’t spending my money wisely. I had a lot of money going into the home, transportation, and finance charge categories, leaving little for savings.

“It’s not your salary that makes you rich, it’s your spending habits.”

Charles A. Jaffe

The new job brought with it lifestyle inflation: the pool house, the new car, the 52″ flat screen TV, and home improvement projects. My paycheck was depleted by material items, the majority of which could have been avoided. I don’t like to dwell on the past, but if my initial investment years had been as disciplined as my most recent ones… Damn!!! I’d be telling a different story right now.

But this is my story, and it had to play out this way for me to be in this position. And it’s an incredible situation. I’m living a grateful life that allows me to be truly happy with the love of my life.

My initial investment years (2006-2011)

When I first started, I knew nothing about investing in stocks. When I was a kid, I didn’t get any stocks as a gift from an uncle or grandparents. There were no family members who understood how the stock market worked. My parents had real estate and farmland investments, but the stock market was a complicated and untouchable world to them.

When I opened my first investment account, I had no idea that a whole new world of investing was about to open up in front of me. During my first 5-6 years of investing, I continued to make my 401(k) minimum contributions to a target date fund. Because I didn’t know much about investing at the time, choosing a target date fund was a wise decision.

A target-date fund is a mutual fund in the hybrid category that automatically resets the asset mix of stocks, bonds, and cash equivalents in its portfolio according to a selected time frame that is appropriate for a particular investor.


When you choose a target date fund close to your retirement date, your portfolio’s fund allocation becomes more conservative as you get closer to retirement.

Saving for retirement sounded boring to me until I discovered FI

I kept saving for a retirement that seemed so far away because I assumed it was something reserved for senior citizens. I knew I needed to save for retirement, but I wasn’t excited about it. There were no early retirees in their 30s writing about it. Retirement was something I was looking forward to, sometime in the year 2035. Retirement has taken on a new meaning for us, and it is something we look forward to. We’ll leave our jobs to pursue our interests. Who doesn’t want that?

The market crashed two years after I began investing, wiping out half of my 401(k) balance. Fortunately, it was a small sum of money at the time; otherwise, I would have been terrified and unsure of what to do next. I had no prior investing experience. The period known as the Great Recession left its imprint.

The remaining savings from the carnage were invested in a 401(k). There was no way to withdraw that money without incurring penalties. Selling was not a smart option. I wasn’t going to withdraw money and face a 10% penalty! I kept putting money in, and it took me a couple of years to make up for my losses, just like everyone else who didn’t sell in a panic.

During the recession, I opened a brokerage account and purchased a few stocks, but I wasn’t investing. Rather, I was speculating and learning some important lessons in the process.

In 2009, I resolved to learn more about investing and take a more active role in my investments. I took it upon myself to learn everything I could about investing. I read a few books. I learned about the stock market and mutual funds in my retirement plan. It’s amazing what you can learn on your own when you put your mind to it.

“Invest in yourself. Your career is the engine of your wealth.”

Paul Clitheroe

By 2010, the wheels had begun to turn. I switched my contributions from the target date fund to other index funds in my plan.

The best investment years, so far (2012-2016)

How things have changed since I began putting money aside for retirement. We are now planning on retiring within the next three years!

And how did I move my retirement date forward by 16 years?

First, I had an epiphany, then I realized that my relationship with money needed to change, and finally, I met a partner who shares my life goals. We’ve been working hard by delaying some gratification in order to invest everything we can. The only condition is that we thoroughly enjoy the journey.

In terms of money, the last four years have been the best so far. After realizing that the most valuable luxury money can buy is our freedom, I paid off all of my debts and started contributing the max to my 401(k). There will be no more saving the bare minimum for a match and hoping for the best.

The graph below depicts the consistent progress made over the years. I started with 1% of my current balance in 2006 and worked my way up to 100% in 2016.

A well-oiled FIRE couple

Tatiana and I have become a well-oiled FIRE couple by investing in our retirement plans! Her figures aren’t included above, but they’re pretty close because she started working a year after me. We do our own investing and have a good asset allocation strategy.

The most important thing is that we understand why we are investing. We don’t just buy an investment because someone suggests it; it has to make sense for our objectives. Every investment in our portfolio is owned for a reason.

I enjoy investing and am constantly learning about rates of return, tax harvesting, and market sectors. But I didn’t get this far without making mistakes. They weren’t massive, but they were significant enough to teach me valuable lessons.

“An investment in knowledge pays the best interest.”

Benjamin Franklin

Some of my mistakes, such as buying a few stocks instead of index funds, resulted in losses, which I chose to view as the cost of learning. I’ve also learned a great deal just by being invested in the market. Most of this seems basic to me, but we sometimes complicate things by failing to apply basic investing principles.

Lessons from my first decade of investing

1. Invest rather than speculate

I didn’t grow up around people who invested in the stock market, so my exposure to stock market investing was limited. Latinos generally become wealthy through entrepreneurship and business ownership. Every time I heard about the stock market, it was for one of two reasons: a) news of a guy who lost a fortune or committed suicide as a result of a market crash. b) Someone or a friend of a friend who made a fortune trading stocks. c) Spanish news outlets sounding the alarm that la bolsa de valores (the stock market) is collapsing.

Because I had not been exposed to the positive stories of long-term investing, stock market investing sounded like a gamble to me. A market in which you place bets on rising stocks with the intention of selling them once they have gained value. I discovered that I was speculating rather than investing.

Speculation and investing are not the same thing. I had to learn this lesson the hard way. In late 2008, I purchased a few stocks and traded them back and forth in the hopes of making a quick profit. I was looking for short-term profits, and there were good days and bad days.

By early 2009, as the market continued to fall, I became impatient, gave up on that game, and took my losses (I lost about a couple of thousand dollars). Following that, I decided to focus on my 401(k) investments and invest for the long term.

2. A stock is more than a ticker symbol

“Price is what you pay,” Warren Buffett says. “Value is what you get.” When I invest in a fund, I look at the fund’s stocks and bonds because the fund’s stocks all represent businesses. When I buy a stock, I’m buying a piece of a company.

“Investing simply and in strong companies may not be the sexy way to invest nor will it produce the amazing returns that off stocks produce or that option income can produce. But, it will help you build a strong portfolio of companies that you know, understand, and know are capable of rewarding shareholders over the long run.”

Bert, Dividend Diplomats

I don’t buy individual stocks anymore, but if I do decide to do so in the future, you can bet I’ll be researching the company behind the stock. I wouldn’t buy something based solely on its price history and brand recognition, or simply because someone at the supermarket believes it will increase in price without sound reasoning.

“The stock market is filled with individuals who know the price of everything, but the value of nothing.”

Phillip Fisher

3. Use appropriate investment vehicles based on your time horizon and risk tolerance

When it comes to allocating your money, there are numerous schools of thought. I have a rule of thumb that if I need the money in less than 5 years, I don’t put it in stocks. It could be in bonds, CDs, or any other low-risk investment vehicle, but not in stocks.

4. Allocate assets properly

A proper asset allocation reduces the risk of being overweight or underweight in one asset class relative to another. I was doing some market timing a few years ago without a proper asset allocation. One of the mistakes I made was putting a large portion of my 401(k) investments in cash, believing that the market would correct after such a long bull run. The market then performed admirably the following year!

I lost some ground by withdrawing from the market rather than following an asset allocation strategy. I didn’t lose money, but I could have received dividends from that portion of the portfolio. After that, I decided to simply reinvest the funds in the market and let it work its magic.

We spent about a year researching different asset allocation models to see what would work best for us, and once we decided, we were content to simply invest our money accordingly. With asset allocation, there is no guessing as to where contributions should be directed and no temptation to make irrational investment decisions.

5. Market timing is a fool’s game

Market timing is nearly impossible to master. The issue with attempting to time the market is that you must be correct twice: when you sell and when you buy. When I decided to put a portion of my portfolio in cash, I couldn’t decide when to reinvest because the market kept rising. No one has a crystal ball on the market.

I also learned that it is about time in the market rather than market timing. If we don’t need the money right away, say in five years, we’d rather have it in the market earning dividends and expecting a higher long-term return than in a money market fund.

6. The stock market’s long-term trend is upward

The market can be down for days, weeks, months, years, or even a decade, but if you look at the stock market trend over a longer period of time, you will notice that it has always been up. This tells me that as long as I’m investing for the long term, I don’t need to be concerned about short-term trends. I don’t read the headlines or even follow the daily news cycle because they don’t matter in the long run.

7. Pick a specific day to invest

It’s critical for us to have a set day for investing, whether it’s weekly, monthly, or quarterly. We don’t have to worry about the market’s ups and downs if we invest on a specific day. If I invest on any given day without regard to any rules, I might be tempted to wait and see if the market is up. As I previously stated, we have no idea what the market will do the next day. It could come back up again and again. So we invest on payday and go about our business.

8. Investment fees matter

We have always been and will continue to be do-it-yourself investors. We are wary of investment fees and understand that what one can pay in fees can have a significant impact on returns. One feature that I like about the Personal Capital investment tool is that it tells us how much we pay in investment fees and provides fee projections over time.

9. Have multiple sources of income

In addition to investing in equities, we have a rental property that generates monthly cash flow. We may sell it before retiring, but that does not mean that our income will be solely derived from our stock and bond portfolio.

Taking advantage of other investment opportunities is one sure way to secure our cash flow after retirement. Before retiring, we’ll spend the next two years researching other investments, possibly in real estate. The takeaway here is to diversify your income streams in order to reduce the stress on your portfolio.

“The real key (to wealth) is to have multiple flows of income that are indestructible due to economic conditions or technological developments.”

Grant Cardone

10. Use tax loss harvesting to your advantage

The practice of selling a security that has suffered a loss is known as tax loss harvesting. Investors can offset taxes on both gains and income by realizing, or “harvesting,” a loss. It can be difficult to understand at first, and there are rules to follow in order for it to work. I had never heard of tax harvesting until I saw bloggers discussing it. This year, we’re putting this strategy into action on our non-retirement accounts.

11. Keep learning

I continue to learn, and the more I do, the more I realize there is always so much more to learn. I occasionally drive Tatiana insane with new investing strategies, but I don’t mind changing my mind based on new information. It is about developing new logic and ways of thinking. In addition, I prefer to make informed investment decisions because it allows me to take calculated risks and improve performance.

12. Keep an eye on asset diversification and net worth allocation

We have a diversified portfolio now, which is important, but having diversified assets will be even more important in retirement. We’re building a portfolio that needs to last at least 60 years, and having different kinds of assets would allow us to sell some while others might be down. The key will be to continue to buy low and sell high..

I also track our net worth asset allocation. It’s useful to get a bird’s-eye view of the entire scene. We still have a long investment path ahead of us, and as our stock market investments grow, we’ll eventually transfer some of the gains into tangible assets like real estate.

13. Asset location is as critical as asset allocation

For tax purposes, we need to know where we hold our assets in our portfolio. This was an important lesson to be learned as we developed our asset allocation strategy. Different types of investments are taxed differently. We keep the majority of our bonds in retirement accounts so that the interest is not taxed as ordinary income. That is just one of several ways to save money on taxes.

14. The party is over when dumb money follows smart money

The quote in the header above was something I heard somewhere along the way, and it has stuck with me over the years. When a supermarket clerk hands you their realtor’s business card, you know the party is over in the real estate market. When 100 personal finance bloggers post every day about how well their investments are performing, you know the party is coming to an end in the stock market.

It is much easier to make money in a good economy or during a bull market. I’m not trying to belittle anyone or discourage PF blogging. On the contrary, I enjoy seeing more blog launches, and I follow many of them on Twitter. This means more people are waking up, taking better care of their finances, and wanting to share their experiences in order to help others.

My challenge to all of us is to become the smart money rather than simply following it! When people are fleeing, smart investors are rushing in to seize opportunities. Be a smart investor!

15. Practice the KISS Method

The most important lesson has probably been to “keep it simple, stupid.” Investing does not have to be complicated. I’ve learned that greater complexity does not imply greater returns. At times, I found myself overcomplicating things and realized that investing should be kept simple. Just because an idea sounds sophisticated doesn’t mean it will be profitable.

Screw having a plethora of confusing spreadsheets to prove a point or holding a plethora of funds in a portfolio that produce similar results as having a fund like the Vanguard Total Stock Fund. Life is more enjoyable when it is kept simple. I prefer to invest to live rather than live to invest.

Final thoughts

I can sum up my first decade of investment in this as slacking in the first half and getting my act together in the second half. It’s like that college student who works hard in junior year to increase their grades and graduate with a GPA above 3.0. So far, it’s been a fantastic investing journey, and I’m excited to see what the future holds for us when we retire and live off of our investments. Despite my learning curve, we were able to achieve a rate of return of more than 8% during our first decade of investing.

I’m excited about our second decade of investing. I’ll learn more about other investment vehicles and begin shifting a portion of our allocation to tangible assets. Tatiana, my life partner and shareholder, is with me every step of the way. What else could I want? 🙂

I’d like to conclude by commenting on one final quote:

“People value and spend their money more wisely when they acquire it by their own efforts—also known as work.”

Larry Elder

When you work hard to achieve financial stability, you will value the freedom that your efforts provide far more than if money were simply given to you. When you carve your own path, the journey becomes more enjoyable.

People who go around spending and thinking that a dollar is just a dollar will never have a hundred dollars in the bank. So look after that dollar, and the bigger bills will look after themselves.

We’d like to hear from you. What have you learned about investing over the years?

Risk disclosure: all investments involve some level of risk, including the possibility of losing principal. The information on this website is provided for discussion purposes only and should not be construed as financial advice.

RockStar Finance and Physician on FIRE have both featured this article.


After dedicating 13 years of his career to Vanguard, José retired from the corporate world at the young age of 44. During his tenure at Vanguard, he expertly coordinated the production of both electronic and print educational materials for 401(k) participants. Now, he relishes in his early retirement, cherishing time spent with his family, indulging in his favorite hobbies, seeking out new experiences, and savoring meals in the comfort of his own backyard.

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7 years ago

It’s really motivating to read personal experiences such as this. Thanks for sharing all those tips.

7 years ago
Reply to  Sikasem

You’re welcome! I’m glad you find it helpful.

Dividend Diplomats
7 years ago

Thanks for sharing your lessons here. The lessons resonate very well with me and it is all stuff I have thought and considered over the years too. Being in the online community, I have watched others change their investment styles and try to one-up the market, aka find the next best way to beat the market. Investing simply and in strong companies may not be the sexy way to invest nor will it produce the amazing returns that one off stocks produce or that option income can produce. But, it will help you build a strong portfolio of companies that you know, understand, and know are capable of rewarding shareholders over the long run.

Thanks for taking the time to share your experiences, again. Lots of good stuff in here!

Bert, One of the Dividend Diplomats

7 years ago

Hi Bert –
This is such a great statement about investing in great quality companies that I made it part of the article. Thanks for sharing your knowledge.

Sarah- tortoisehappy.com

I can say from experience that it is much harder to increase pension contributions, than it is to start on a certain amount. I started a job with a scheme that I could contribute 4% and my employer would match it. Then (and contrary to every other employer), they launched a new scheme that was way better, but you had to contribute 8%. It was a no brainer, and it wasn’t quite losing a further 4% once tax and national insurance was factored in, but it was still a big adjustment to make.

7 years ago

Hi Sarah –
I agree, it’s a lot harder to meet the match when companies have schemes that offer a match but require a contribution higher than 4%. What I would do in that case if I can’t meet the full match right away, is increase the contribution on an annual basis by certain percentage until meeting the full match or maximum contribution. But of course, the FI crowd that wants to reach FIRE sooner rather than later would want to sacrifice a little more to max out ASAP. Thanks for stopping by!

7 years ago

I like your point about picking a day to invest. Despite the fact that I totally agree with you that timing the market is next to impossible, I spent some fruitless time researching “What is the best day of the month to invest?” There really is no consensus out there. So starting now I’m going to have to set up an automatic transfer. I’ve always just invested ad hoc each month.

7 years ago
Reply to  CoupleofCents

Hi CoupleofCents –
The only “market-timing”, if you will, that we sort of do is to rebalance with the new investment cash to keep our intended asset allocation. This minimizes the risk of being under/overweight in some assets.

Picking a specific day it’s a great strategy that takes away the guessing of whether we should jump in or not. On “investment day”, which falls on the same day as payday, we look at the bills that are due before the next paycheck, set that money aside and invest the rest. Rinse, repeat.

Thanks for stopping by.

Xyz from Our Financial Path.

This sums up my whole FI/RE investment strategy. Keep it simple and invest on regular intervals until you have enough. Easy right! 😛

7 years ago

Hi Xyz,
Absolutely, it’s the simple path to wealth! 🙂

Mr Crazy Kicks
7 years ago

Great story! I went through many of the same phases on my journey to FI. Early on I was not maxing out my 401k, and actively trading stocks. After spending too much time trying to beat the market, I finally learned it’s easier and more effective to just make regular investments in index funds. Then down the road, I got a better with optimizing taxes and investment fees. Wish I would have learned sooner, but mistakes are a big part of learning, and I am sure I still have more to learn 🙂

7 years ago
Reply to  Mr Crazy Kicks

Hi Mr. CK,
It’s good to understand how important it is to be able to optimize taxes early on. Maxing out the 401(k) is our most effective way to lower our tax bill.
We all have a lot more to learn and I’m sure more mistakes will be made! So I’m glad that we have this medium to learn from each other. Hopefully the mistakes will be small in nature as we find ways to mitigate risk. Thanks for dropping by.

7 years ago

Tnx for helping others! My personal decision to leave wall street and their manipulations to move into physical assets that pay passive income, real estate, rentals. The comment that real estate is not for everyone does not take into account that everyone is capable of learning and excelling. I did most folks can too.

5 yrs ago my wife retired from teaching so we moved her 30 yrs of hard saving a meager $203k of 403b savings into a Self Directed IRA, with check book control and started buying rentals in good school districts of Atlanta. With rent re-investment the fund went geometric (hocky stick) in valuation. Just 5 yrs later it can be liquidated for $900k and today throws off $7k of rent / month. Easily enough to live off. The math on this gain should be impressive.

I’m certain I did not have the skill and temperament to replicate this in the stock market. I seriously doubt anyone could do the same in the stock market. It is true we bought at the low of real estate, but historically it still is great time to buy. Typical real estate cycles are 15 yrs up, 6 yrs down. The hedgfunds jumping in and buying shortened the 6 yrs to 4 yrs. With the en mas conversion of past buyers into future renters and worsening ave income stats I don’t see anything but great predictions for buying rentals. As long as close to growing jobs and good schools. Best of luck.

7 years ago
Reply to  Curt

Hi Curt,
I agree that most folks are capable of learning real estate investment. We have a rental property that provides a 10% ROI but and it’s much less risky than the stock market. However I bought the property a while back and didn’t make the best of it due to its location. I learned some lessons since then which is making me think about doing a part two of this post to include real estate investments.

That sure is an impressive gain. You more than quadrupled your initial investment in 5 years! Congratulations! I’m interested in learning more about Self Directed IRAs. I think that it is a great option to pursue so that you can have total control of your investments. We’re keeping our options open and are willing to look into those options at some point.

I’m not familiar with the RE cycle so this is great info. As long as you make money when you buy and yes, have a criteria such as a growing job market and good school district, you certainly can’t go wrong with RE investing. Awesome comment! Thanks for dropping by.

Physician on FIRE
7 years ago

An excellent read, and your timeline mirrors mine in that the vast majority of my investing has occurred over the last ten years and I’ve learned a lot in the process. I also started with target date funds and actively managed funds-of-funds, but have “graduated” to owning nothing but simple passive index funds.

Keep up the good work, and I hope Mr. Market is kind to you over your remaining months to the ultimate goal.


7 years ago

Hi PoF-
I also noticed that our investing styles do have a lot of similarities, after reading your asset allocation post. It’s good to be in great company!

I’m not sure what to expect from Mr. Market (and never will be) but it will all depend on how we define kindness. Maybe he’ll give us a gift of a 20% drop so that we can buy more before we conclude our accumulating stage? As much as we don’t like to see our net worth drop, a correction might be the best thing to come our way now.

I’m glad you liked the article and thank you for commenting!

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