Everyone makes money mistakes, and if you learn from enough people, you can avoid common pitfalls on the path to wealth. Financial blunders aren't limited to people who don't have enough money to cover their expenses. Many high earners have also made mistakes with their money, and many of them turned to Reddit to share things they did wrong.
"Two high growth years of compound interest lost because I wasn't paying attention to my accounts," one high earner said.
These are some of the other expensive money mistakes that came up.
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Thinking You Can Beat The Market
Many Redditors regret trying to beat the market. One of the top comments came from someone who said they used to buy individual stocks but now stick with ETFs. While it's possible to beat the stock market, ETFs make it easier to achieve market returns. A fund manager handles everything for you, and you only have to pay a small expense ratio.
Investors can choose from many ETFs that track popular benchmarks like the S&P 500 and Nasdaq Composite. You can save time and generate higher returns with an ETF.
Many high earners mentioned this money mistake, but individual stocks weren't the only culprit. Options trading, special purpose acquisition companies, and angel investing are some of the ways people have tried to beat the market. Several high earners regretted dabbling in those areas.
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Divorces Are Costly
Divorces came up a lot in this Reddit thread. Some people were grateful that their spouse was able to communicate how they wanted to divvy up assets without getting lawyers involved. However, others mentioned that both spouses were paying lawyers $500 per hour because they couldn't have a conversation about it.
Marriage is a wonderful thing if you find the right partner. These divorce stories shouldn't deter people from seeking marriage, but they should make them extra careful about who they marry. Knowing the financial devastation that can take place if you choose the wrong partner is healthy.
It may also be beneficial to sign a prenuptial agreement before getting married. That way, there is a clear framework for what happens in the worst-case scenario. Very few people marry with the intent of getting divorced, but people can change a lot in a few years. That's why a prenuptial agreement can be valuable.
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Not Taking Money Seriously Right Away
One of the most common money mistakes that came up was people who regretted not taking money seriously earlier. A few high earners lamented about not taking money seriously until their late 20s. Other people commented by saying they didn't take money seriously until their 30s and 40s.
Compound growth is one of the best resources for people who want to build long-term wealth and retire on big nest eggs. Your portfolio can compound over time and eventually outpace your salary. For instance, a $5 million portfolio with a 4% yield brings in $200,000 per year. That's more than what most people make.
A $5 million portfolio doesn't come overnight. It takes many years of diligently saving and investing money. Many high earners encouraged people to start investing now instead of putting it off.
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