Introduction
When I turned 18, my grandmother gifted me a bank account with 2,000 pesos, encouraging me to learn money management. She trusted my prudence and knew I wouldn’t squander it.
Early Investing Experience
My first foray into investments involved moving the money into a bank investment to generate returns. Simultaneously, I researched available options and products within and outside the institution, dedicating time to learn about investments through books.
Back then, investment options and accessibility were limited. There were no Cetes Directo, regulated online brokers, or affordable access to casas de bolsa. Fondos de inversión were the primary option, with high management fees and a narrow focus on the domestic market. Global company investments, even indirectly, were unheard of.
This scarcity of options led me to obsess over finding the best alternatives for my money. I diligently read El Economista’s investment fund supplement, checking rankings and aiming for top-performing funds that consistently outperformed benchmarks. However, many were inaccessible due to high minimum investment requirements.
The Mistake: Over-Optimization
My biggest investing mistake wasn’t neglecting risk, impulsive decisions, or an unsuitable portfolio. It was the gradual, subtle degradation caused by my own restlessness.
I fragmented my capital across various products, constantly evaluating performance, commissions, and rotating my capital. This excessive focus on optimization ultimately harmed the net returns of my investments.
Although I understood past performance didn’t guarantee future results, I believed statistics and consistency indicated better fund management. I was mistaken; a lucky streak doesn’t ensure sustained success, as fund managers frequently change.
My obsession with optimizing my portfolio led me to buy all six high-performing variable income funds, believing diversification would protect me. I failed to recognize that this approach increased complexity without adding value.
Learning from Mistakes
Fortunately, I recognized my error relatively early. The investment landscape evolved, introducing low-cost index funds like ETFs in Mexico, initially accessible only to “qualified investors.” Today, anyone can purchase these funds.
My current investment strategy is simple and straightforward. I manage a core portfolio consisting of a low-cost, globally diversified ETF, allocating 85% to 90% of my available investment capital.
The remaining funds are used for more speculative, asymmetric investments with higher risk but potentially greater returns. This money isn’t crucial to my plan, so any losses wouldn’t jeopardize it.
Key Questions and Answers
- What was your biggest investing mistake? My biggest mistake was over-optimizing my portfolio, fragmenting capital, and excessively focusing on rankings instead of understanding the underlying fund managers’ motivations.
- How did you learn from this mistake? I recognized the error relatively early and adapted my strategy to simplicity, focusing on low-cost index funds and maintaining a core portfolio.
- What is your current investment strategy? My strategy involves a simple, globally diversified ETF as the core portfolio and allocating the remaining capital to more speculative, asymmetric investments.
