I showed my embarrassingly messy investment portfolio to a financial planner, and she called out 4 mistakes to stop making


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  • As a rookie investor, I know my portfolio is a mess. So I asked a financial planner how to clean it up.
  • She said I have too much crypto and should limit it to 3-5% of my portfolio.

I started investing for the first time at age 32 without a ton of knowledge or a specific plan. I took a chunk of cash that was sitting in my savings account and invested it in the stock market, picking businesses based on friends’ recommendations and my own research.

Now that I’m 34, I’ve started to realize that my overall investment strategy is lacking focus and perhaps is even a little too risky to support my long-term goal of retiring early as a millionaire.

That’s why I decided to sit down with financial planner Kelly Klingaman to find out just how messy my investment portfolio really is and what I can do about it. She pointed out a few mistakes I’m making and how to fix them.

1. Investing 15-20% of my portfolio in cryptocurrency

It wasn’t until I sat down to audit my financial portfolio that I realized how big a share of my investments are in cryptocurrencies.

When I shared this information with Klingaman, I admitted that I didn’t have a reason or a strategy behind these investments. I just put money in digital coins that seemed promising or that other people in my life influenced me to invest in.

Klingaman said that this approach was not only risky but also not in line with my long-term goal of retiring early and as a millionaire.

“Cryptocurrency is like having dollars in your wallet,” says Klingaman. “Just because you own one doesn’t mean you’re entitled to more dollars in the future.”

Klingaman explained that having so much of my money invested in these digital coins can potentially carry more risk since you can’t expect a positive return unless you have an ability to predict the future and know which of these coins will rise in value over time.

“It’s more of a guessing game that people like to play with cryptocurrency,” she said.

While she didn’t advise me to pull out my entire stake in crypto, she did say it made more sense to keep it a smaller part of my portfolio, around 3 to 5%.

2. Investing too little in too many individual stocks

I only started investing in the stock market recently, and as a rookie investor, I didn’t know what I was doing. I shared with Klingaman that I have a habit of investing too little money in too many individual stocks.

While she said this mistake is normal, it can be a strategy that’s a big waste of time.

“Even professional money managers can be bad at picking stocks and timing the market,” says Klingaman. “They mostly get lucky.”

Instead, she recommends investing your money in broad, diversified vehicles, like mutual funds and exchange-traded funds.

But if you get the itch to invest in individual stocks, Klingaman said it’s OK to set aside a little money that you want to use to do that, but keep it to a minimum of your overall portfolio.

3. Not diversifying the sectors of my investments

When I looked into my investment portfolio, I noticed that the majority of companies I’m investing in are in the technology sector.

Klingaman identified this as a mistake and reminded me that a key to investing is diversification.

“Rather than investing in just one sector and trying to guess which sector will be the next top one, it’s better to spread your money out around different companies, countries, and categories so you have a better chance at growing your portfolio,” she said.

Klingaman recommends keeping it simple with a three-fund portfolio that can include a US-based index fund (so you have exposure to a large number of companies), an international index fund (so you have exposure to many countries and emerging markets), and a global bond fund.

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4. Not having a solid strategy

Since I’m a relatively new investor, much of my current strategy is based on advice from friends and decisions that I’ve made on my own.

Klingaman said it’s best to make my strategy a little bit tighter and recommended that I automate my investment process.

“A good goal is to put 15-20% of your income into saving and investing so you can stay on track with your long-term goals and keep a steady cash flow into your three-fund portfolio,” she said.

While it’s been on my to-do list, I haven’t yet set up automatic deposits into my brokerage accounts. Doing so will hold me accountable every month with a minimum amount of money I want to add to my investment portfolio.

This article was originally published in July 2022.



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