By financen | February 16, 2011 - 1:17 pm - Posted in Personal Finance

So far, I have done two smartest things in this year. One is I started with a Roth IRA for myself and my wife. I chose Fidelity because the startup fee was relatively low and my 401K is with them. I dumped a lump sum amount of $2500 into FLATX for my wife and FSEAX for myself. It would have been more beneficial for me if I had it started sooner due to seeing it getting compounded. Now I just have to keep up the habit of contributing yearly.

The other smart thing that I did this year and I will do it again in the next year is getting taxes done early. We got our tax refund. It’s a lot easier to get it done ASAP and out of the way. There’s no more scrambling for receipts and papers like it happened last year.

However, apart from these two smart things, I did one stupid thing and that was to chase past returns. I assumed that the emerging markets will stay hot. I calculated my last year’s return and put 40% and 50% in the funds I bought positions in and got excited. I bought the hype of a growing economy in China, and an oily beast in Brazil. I was under the impression that these two economies of the world will do better than the United States over the next few years in the financial realm. I was aware that past results don’t predict future success and realize that it’s risky but I figured that I have a long investing career ahead and it was time to go for big returns now.

I admit that I was tempted with the thought of making more money in quick time, even though everything I read is contrary to making fast money. Investing can be very boring. It is important that you get a well diversified index fund with very less fees and invest systematically, the same amount no matter until what you’re done working. I agree I wanted to be a little flashy and take a shot at some bigger returns. I understand what it happens if I try to jump at things that sound almost too good to be true. We will see what happens over the next few years.

By the way, I saw my 401K recently pasted a landmark of $20,000. My goal is to have at least $30,000 in there by the time I reach the age of thirty.

What is the smartest or dumbest money move that you have made this year?

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