Retirement saving: three things I wish I'd known when I was 20

Learning and adopting good investment habits early on in your investment career is extremely important and can have a large impact on your wealth over time. The fewer mistakes you make, the more chance you have of achieving financial independence and retiring with a sizeable savings pot.

With that in mind, here's a look at three things I wished I had learned when I was 20.

Risk management is really important

Without doubt, if I could go back in time and start my investing career over again, I'd pay way more attention to the risk side of investing, instead of placing so much focus on reward. I've experienced some heavy losses over the years, and it was always a result of a lack of proper risk management.

To avoid this, I'd build a portfolio that was much more diversified than my portfolios of the past. I'd invest in a large number of stocks across a wide range of sectors, ensuring that my exposure to individual companies or sectors was limited. This way, if a stock or sector performed poorly, it wouldn't impact my wealth too much. I'd focus the bulk of my portfolio on large-cap stocks for stability, but also add in selected mid-caps and small-caps for growth. I'd use funds to get exposure to international stocks for geographical diversification as well.

I'd also steer clear of 'story' stocks that were promising the world, yet had no revenues or earnings. Over the years, these kinds of stocks have had the largest detrimental impact on my wealth.

Dividends can make you wealthy

When I was 20, I had no interest in dividends, whatsoever. Instead of focusing on building up my wealth through dividends payments of 3%-4% per year, I was much more interested in trying to make 5,000% from exciting small-cap stocks and get rich overnight.

Over the years, my investing habits have changed. I've learned that dividends actually make up a large proportion of total stock market returns over the long run. As a result, they shouldn't be ignored. Reinvested over the long term, they can generate powerful returns. I've also learnt that stocks that could potentially return 5,000% often go on to lose 90% of their value.

You can't trust everyone

Lastly, another thing I wish I'd known about investing when I was 20 is that it's important to be selective about which 'experts' you listen to.

Sell-side brokers are a great example. Their calls should be taken with a grain of salt. Essentially, brokers rate way too many stocks as a 'buy.' Often, these analysts are afraid to rate a stock as a 'sell' because that could have a negative impact on the relationship between the company and the broker. Most of the time, they're happy to maintain a buy rating on a stock, knowing that it's your money at stake, not theirs. Therefore, it pays to approach analysts' buy ratings with caution.

Bulletin boards are another good example. Often, traders on these boards will be advising others to buy a stock because of its fantastic prospects, while at the same time, selling the stock themselves. You can't be too careful.

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