One professional, now 38, said they still “really cringe” when they think about decisions they made when they were 28. After landing their first job with benefits, they happily started contributing to the company’s 401(k) plan, which offers a 5% employer match.
But after the incident was brought up at a family dinner, their father warned that the market was “overvalued” and that a crash was imminent. Their mother agreed. Trusting their parents’ faith, they joined the scheme but set their contributions at 1%, with plans to increase them after the economic crisis.
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That car accident happened again three years later. When the market finally fell, fear took over.
“The crash my dad predicted wouldn’t happen for three years,” they recently wrote on Reddit’s r/personalfinance. “When it did come, I panicked and dropped contributions to 0% for about six months because dad said to wait for the bottom.”
By the time they start making appropriate contributions at age 31, they’ve missed out on three full years of employer matching and years of potential compound growth. After recently crunching the numbers, they estimated the lost opportunity cost at between $40,000 and $55,000. “I will never forgive myself,” they said.
“Financial advice from people who love you and sound confident is still just a guess,” they wrote. “The cost of guessing wrong at 28 is the price you pay at 38.”
Many commenters pointed out that skipping employer matches is the biggest mistake. The 5% match is essentially free money. Even if someone is worried about a recession, they can usually contribute to a 401(k) and choose more conservative options within the account, such as cash or bond funds.
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Others echoed a refrain that often comes up in investing discussions: “Time in the market trumps timing the market.” Trying to wait for the perfect entry point often results in sitting on the sidelines while the market continues to move.
The post also turned into a larger discussion about how much influence parents have over financial decisions.
One commenter said that many people are 28 years old and still very much trust their parents’ opinions. They added that confidence does not equate to expertise.
Some have shared their own hard lessons, from withdrawing money during the 2008 financial crisis to not investing in their superannuation for years. The consensus is that most long-term investors have made painful money mistakes in the past.
