After losing much of his initial investment when the dot.com bubble burst, Pablo Romero Barrios learned the importance of a diversified portfolio and that historical performance isn’t a guide for how an investment will perform in the future.Supplied
Pablo Romero Barrios, 53, food safety epidemiologist, Ottawa
What was your first stock?
In early 2000, in my late 20s, I decided to invest money I had saved during my first few years of working. I remember being excited; it was the first time I was making financial decisions on my own. I had no idea how to start, so I went to my local bank and spoke to a financial adviser who suggested I buy a technology-focused mutual fund. He said the fund had been performing very well. I took his advice and bought that fund with all the money I had saved. A few months later, the dot.com bubble burst, and I lost two-thirds of my investment. The losses were hard to swallow, but fortunately, I was young and working and didn’t have an immediate need for those funds.
What did you learn from the experience?
While painful, the experience forced me to learn more about investing. I learned that historical performance isn’t a guide for how an investment will perform in the future and that diversification is important. I also learned to do my own research to better understand what I’m investing in and not just take advice from someone else. Looking back, I feel lucky to have learned those lessons early in life when I didn’t have as much money to lose. Those served me well, and I’m glad they didn’t put me off investing altogether.
What happened to that tech fund?
Because I didn’t need the money, I decided to hold on to that fund until it recovered. It took 15 years! Meanwhile, I set out to learn more about investing with much more skepticism. I learned about the impact of fees and how to save money on fees through low-cost exchange-traded funds (ETFs). That led me to my current investment strategy, which includes investing in broad-based ETFs. As soon as I broke even on that tech fund, I sold it because I didn’t want to pay the higher mutual-fund fees. I also wanted to own more diversified funds. I’m a do-it-yourself investor today and own a combination of stocks and ETFs.
What advice would you give someone today buying their first stock?
I encourage them to invest but ensure that they have time on their side. I don’t believe in trying to find quick returns. Also, do your homework and diversify your investments. That’s hard to do if you want to buy individual stocks when you are starting and don’t have much money, so ETFs are a good option – and their fees are low.
This interview has been edited and condensed.