A hard won lesson on investing

I started saving for my retirement in 1991 because my employer offered matching contributions. Matching money is free money so I saved exactly as much as they would match. Since I started at $7/hr, two percent of my check was about $6 per week. It’s a trifling amount but when I quit to found MichWeb 3 years later, I had saved about $900.

I paid no attention to that account until Kysor was acquired a couple years later. I was forced to roll over my retirement account and the dollar value was quite surprising. I had invested $900, the company match had kicked in another $900, and over 5 years it had grown to around $5,000. I invested for the match but learned a valuable lesson on leveraging compound interest.

Years later I read a book by Peter Lynch. One of his most famous bits of investing advice is, “buy what you know.” Instead of taking the advice of Wall Street or your neighbor, invest in companies whose products you are familiar with. If you eat Cheerios every morning, General Mills might be a good stock for you. If you ride a hog, Harley Davidson might be a great choice.

I know AAPL because of my familiarity with their products. For several years, I got into the habit of buying their stock at $15 and selling at $25. That was fun until one day I sold and the stock never came back down! After months of waiting, I bought back at (gulp) double the price I had sold at. This brings me to my hardest won lesson on investing: every notable error I’ve made investing was a sale. Over all, I’d be better off if I had never sold anything.

I ran the numbers to answer a nagging question, “How much more would we have in our retirement accounts if I had never sold AAPL stock?” $15,950. Tomorrow, that number will be even bigger.