Your greatest financial mistakes
Whether you are investing in the stockmarket, starting a new business venture or buying your first home, the world of finance is riddled with pitfalls.
Even the most experienced investors can fall foul of the first rules of stockpicking, and the most savvy consumers can get caught out. Nobody can get it right every time.
Here we talk to readers and experts who have agreed to share their biggest financial mistakes.
Rhys Davies made an expensive mistake when he bought his first home in 2011. The 27-year old managed to scrape together enough money for a deposit on a two-bedroom flat in Cardiff. "It was just what I had been looking for in a brilliant location and I just wanted to get in there," he explains.
Rhys, who works in digital marketing, got stung twice. Firstly, he admits that in an attempt to manage costs he settled for a basic valuation rather than a buildings survey on the flat.
"I wanted to save on the cost of a full survey and assumed anything sinister would be picked up when the mortgage company did the survey for the valuation. After a few months, I noticed marks on the walls and it turned out that an exterior wall was riddled with damp. It ended up damaging lots of clothes as it was a wall in a built-in cupboard, which I used as a wardrobe."
Rhys also got stung with unexpected service charges on the property.
He said: "The estate agent touched on the service charge but implied that it was due to be 'at least halved' as they were in the process of throwing out an expensive management agency under Right to Manage.
"I didn't really push beyond that, as it was the dream flat and just thought: 'How expensive could it be?' It turned out to be very expensive. It took over a year for the Right to Manage to go through, and it cost more than £1,200 a year – an extra £100 a month that I had not accounted for. Along with all the costs of a new home that was £100 I couldn't really afford. But I had no choice but to pay.
"The solicitor didn't flag it up during the process but I know it's something I should have checked on. Next time I buy a property I will be prepared for the pitfalls and be far more thorough, doing an affordability check across all costs, as well as getting a quality survey. After all, you get what you pay for. Cutting costs in this way proved to be a serious false economy."
Rebecca Greaves, 21, learnt a harsh lesson after losing money through a business venture that turned sour. Rebecca, from Burnley in Lancashire, lost thousands of pounds after investing in a friend's fitness studio and taking classes for which she was never paid.
Rebecca says: "I regularly attended fitness classes at a local studio and struck up a friendship with the woman in charge. Zoe (name has been changed) and I became friends quite quickly and after a year she invited me to join her in teaching classes. At the time I was working as an administrator in an office and looking for something that was flexible and fun to do during the evenings that could boost my earnings.
"I went with my instincts and trusted Zoe, so agreed to join forces. I trained so I was qualified to teach and spent around £800 on equipment for the gym, such as mats and weights for pilates, step and Zumba classes.
"I started to get worried when after a few months I hadn't been paid for any classes. Zoe was using every excuse under the sun as to why the money hadn't reached my account but she managed to keep giving me what seemed believable reasons and I just didn't challenge her because I trusted her.
"This went on for a whole year while I taught three exercise classes a week. Then one morning I arrived at the studio but couldn't get inside. My keys didn't work in the lock and people were starting to arrive for my class, which I found incredibly embarrassing.
"Eventually, I had to turn them away and try to find out what was happening. I couldn't get hold of Zoe for hours but it turned out the rent for the studio hadn't been paid in a while so the landlord had changed the locks. It seems Zoe had been giving excuses far and wide about non-payment."
Rebecca says she spent several months trying to retrieve the equipment she had bought so she could sell it and recoup some of the money she spent.
"I realised that I had trusted the wrong person and that handing over such a large amount of money was extremely foolish," she says.
Rebecca no longer teaches fitness classes and is currently seeking redress from Zoe through the small claims court for both her outlay of £800 on gym equipment and her missing wages.
"I really hope I get my money back. I have learnt a very important lesson either way. I will never part with money again in such a hurry for a venture I haven't researched thoroughly.
"Looking back, I should have drawn up something up on paper before shelling out my savings, as well as having something in writing to specify my wages."
Confessions from top names in finance
Sarah Beeny, property developer and founder online estate agency Tepilo
"When I started investing in property to make a living, my inexperience cost me dear. I had the opportunity to buy a fabulous property in north London. It was an enormous property but had the tiniest garden. I couldn't see how I could make it work and so stepped away.
Other developers came and snapped it up and actually demolished some of the house to free up some land for a garden. They doubled their money and I lost out.
"I also made a very bad mistake when I splashed out on a sports car. I treated myself to a TVR which, looking back, I hardly drove, kept in a garage for about a year and sold it for £3,000 less than I paid for it. I learnt the hard way that cars are just not a sound investment."
Danny Cox, chartered financial planner Hargreaves Lansdown
"One of my first investments was a Prudential With Profits savings plan, taken out when I was about 21. I was not in financial services then but working as a department manager at Sainsbury's. I knew I should have been saving and a friend recommended I took out the Prudential plan. An off-the-cuff suggestion from a friend is not an ideal channel of advice. I saved £20 a month and thought I could build up a decent fall back over the 10-year life of the plan.
"The mistake was cashing it in after two years - it was worth almost exactly what I had paid in, so I wasn't unhappy at the time but had I hung on to it until maturity it would have been worth much more.
I was buying my first home and was collecting every penny I could to put towards the deposit. Being only two years into a 10-year plan, it wouldn't surprise a more experienced investor that it hadn't grown. Looking back, I was probably actually quite lucky, as had the market fallen in that period I may have been hit with a hefty exit penalty.
"The lesson I learnt is to choose investments wisely. Once chosen, stick with investments and don't be tempted to cash in when the going gets tough.
"Life will always bring up opportunities to spend your money and its how you fend off the unnecessary and prioritise the important that will make such a difference to your financial wellbeing."
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
Small claims court
Courts that sit in England and Wales (Sheriffs Court in Scotland) and used by the public to resolve most consumer and personal-related disputes. “Small claims” refer to action where the monetary value involved is £5,000 or less. You can claim for faulty goods or services and even for wages owed and also bring a personal injury claim, as long as the value is under £1,000. You can also use small claims court if you’re a tenant claiming against your landlord for repairs that total less than £1,000. It’s worth noting that, even if you lose your case, you won’t have to pay the other side’s costs.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.