I'm writing this post because I feel that we don't learn from our mistakes unless we write them down.
My hope is that
1) I'll never be so foolish again
2) others will avoid making a similar mistake
Background: I'll start off by thanking my parents for getting me to invest early and max out my IRA every year when I was a teenager. They even talked to their 'investment guy' from Merrill Lynch and he set up my IRA and managed it for me - I didn't have to do a thing!
For about 8 years as a teenager and early-20-something I blindly gave him my money each year, and he put it into the "long-term, higher risk" investment category of mostly equities. I got lots of mail saying each month declaring that he sold this and bought that, all of which I tossed in the recycling. In 2011 I started taking more of an interest in my investments and I started my own account with Vanguard, and saved everything I could in their low-cost SP500 fund. However, I just left the old IRA with Merrill-Lynch on autopilot.
This year I decided to finally get serious and take more control over my own accounts. I was pretty sure I wanted to consolidate all my IRAs under my Vanguard account, but I needed to see how the ML account preformed. For all I knew, the ML guy could be one of the ~20% who routinely beats the market after fees! My parents sure liked him.
The realization - I got raped. I compared yearly balances from 2004-2013 to SP500 returns with dividends reinvested.* It wasn't pretty. Over the longer time periods, I trailed the SP500 by 2.5-2.9% annualized. More recently, from 2011-2013 I trailed over 5% per year. For every single one-year period I looked at, he trailed the SP500. As near as I can figure, I would have over $8,000+ more had I just invested with Vanguard from the beginning. Ouch.
Thank goodness I've learned my lesson now when I"m in my early 30s, instead of 20+ years down the road.
* for those that care, I used the SP500 calculator found here: http://dqydj.net/sp-500-return-calculator/