Pros fess up to their retirement-building blunders

We all make mistakes. But when they involve retirement, serious mistakes can mean working till you drop instead of retiring in style. Invest too conservatively? You could fall short of cash in retirement. Too aggressively? A market downturn could wipe out your savings.

And here's a sobering thought: Even financial professionals - people who are paid for the wisdom of their judgments - commit financial blunders they live to regret. USA TODAY asked several experts to reveal their most regrettable financial decisions. Some of their errors led to huge losses.

Still, their experiences show that most financial mistakes aren't fatal to your retirement, as long as you learn from them. One common refrain: Start investing, carefully, as early in life as possible. And keep it up.

"If you can invest well, you don't need to save nearly as much for retirement," says Mark Zandi, chief economist at Moody's Economy.com. "And if you invest early, you won't have to save as much over your lifetime."

Here's a look at some of the mistakes the pros say they made and what they could have done differently:

Mark Zandi

Chief economist at Moody's Economy.com.

Biggest mistake: Letting savings languish.

Zandi says he treated his investments with "extreme benign neglect" throughout his 20s and 30s.

"I think I saved reasonably well, but I spent no time or thought on how to invest those savings," he says. "So, consequently, my savings ended up in low-yielding cash instruments. I really did not invest in stocks or bonds or real estate.

"I was barely keeping pace with inflation, which I think is a very significant mistake because of the power of compounding," Zandi says. "I gave up a lot of potential return in the '90s. But I was taking a lot of risk in other aspects of my life, because I was starting a business. All my energy and waking hours were focused on that.

"I don't think many of us get any kind of formal training in personal finance. At least I didn't. The only training I got was that I just watched my father do the bills."

What he would have done differently:

"I should have put my money on autopilot and automatically transferred money from my checking account into a plain-vanilla stock index fund," Zandi says. "I would have gotten some diversity, but I wouldn't have had to spend a lot of time on it."

Zandi says the experience taught him the importance of educating his three children about investing. "They are old enough to make it fun and interesting," he says. "Even as simple as opening a very small account to trade stock.

"It's just a matter of commitment and discipline and spending the time. The way I think about it now is: Managing your personal finances is a daily affair. It's like brushing your teeth."

Sheryl Garrett

Founder of Garrett Planning Network, a network of fee-only financial planners for middle-income consumers

Biggest mistake: Investing in timeshares.

Garrett bought her first Florida timeshare in the early 1990s, while vacationing in Orlando. At the time, she was 26 and didn't have much of a nest egg. She attended the timeshare company's 90-minute presentation for the freebies - breakfast, $50 in cash and tickets to Universal Studios - convinced she could resist the sales pitch. But once she got there, she says, "All the language the salespeople used to sell a timeshare worked perfectly on me."

Two years later, she attended another seminar and ended up buying a second Florida timeshare - this one even more expensive than the first. Her reasoning: "If it was a darn good idea the first time, it was a good idea the second time.

"The thing I failed to figure out ahead of time," Garrett says, "was how much the darn things cost."

She spends more than $1,000 a year on taxes and maintenance fees for her timeshares. Exchanging them for another location costs an additional $300. And she's found it difficult to exchange her weeks in Florida for timeshares in places she'd prefer to go.

When Garrett tried to sell her timeshares, she learned another tough lesson: Timeshares are lousy investments. On the secondary market, she says, buyers can buy timeshares for a fraction of their original value.

What she would have done differently:

She would have skipped the free breakfast. "The only way you can truly protect yourself from this kind of a pitch is to not allow the pitch to ever occur," Garrett says. "They don't buy you a breakfast and give you $50 and let you out easily.

"The only thing that I can do, and I finally learned this about myself, is I don't put myself in a situation where somebody is going to make a sales pitch to me unless it's something I already want to own."

Tom Gardner

Co-founder and CEO of The Motley Fool, an investment advice Web site

Biggest mistake: Selling too soon.

"The tempting thing is to think of situations where you purchase a stock, and it goes down 20 percent or 40 percent," says Gardner. But the biggest mistake he says investors make - and the biggest one he's ever made - is "selling too soon."

Gardner bought Dell stock in 1995 at about $35 a share. By the next year, it had soared about 25 percent.

"That was a wonderful return. I thought, "It's great!' So I sold. I remember saying, "I will get back into this great company when it gets back to my price.' " He never did, and the company's stock has since grown 40 times in value.

"That was a pain," he says.

Investors should learn to "travel with greatness," Gardner says. "Most investors should be inclined to hold the companies they like. Over time, the pain is when you sell a Whole Foods or a Starbucks or a Charles Schwab, and it just keeps going up."

What he would have done differently:

"I should have thought of myself as an investor in a "business", not an investor in a stock," Gardner says.

That means looking for companies that command powerful market positions and executives with big personal stakes in the company. It's even better if the CEO/founder has his name on the company, he says, such as Michael Dell of Dell.

Don't look just at short-term earnings and stock prices, Gardner says.

"If you can find a situation where the CEO owns a large stake in the business, where he's demonstrated a passion for the business, and there is great market opportunity, then that's one where you just close your eyes and hold on for 10 years. Like Oracle or Microsoft or Dell or Amazon.com or eBay or Yahoo. Even though Yahoo has had troubles at some points, it's still gone up 30 times in value since it went public."

Gardner points to Warren Buffett, who Gardner says recently looked at all the stock purchases he'd ever made. "Buffett said, "I would have made more money if I had never sold a share of stock I'd bought since I was 11 years old.' He says he lost a lot of money "fiddling around.' "

Buffett is the No. 2 wealthiest American (behind Bill Gates of Microsoft), according to Forbes magazine. Buffett's worth: $52 billion.

Robert Willens

Managing director, tax and >accounting expert at Lehman Bros.

Biggest mistake: Waiting too long to sell.

"The investment (my wife and I) made in a company called USA Classic seemed, at the time, a can't-miss proposition," Willens says, "but turned out be the worst investment we ever made.

"The apparel they were offering seemed very attractive. Their style seemed to be unique. We were comforted by the fact that they had a company that owned a substantial amount of their stock ... that would be in the position to support it and weather any storms that might arise. We also were impressed with their management."

After the company's initial public offering in the early '90s, "It ran into some operational problems," Willens says. "The products were not always in the store in time for the season. (Management) kept saying that these problems were being resolved. We felt they would get these problems straightened out, so we continued to buy the stock on the way down on the theory that ... if the average cost was so low, we'd have a profit on all of our stock in the aggregate" once the price recovered.

"The company pretty much ran out of capital before the operational problems could be rectified," says Willens, who lost about $140,000 on this investment. USA Classic filed for bankruptcy protection in 1994, two years after its IPO.

What he would have done differently:

If we had to do it over again, "There's no doubt that I would have a stop order in mind, whether it's a formal stop-loss" or guidelines in my mind of when to sell, Willens says. "I would never average down with a small company like this again. The fact that you may have identified what might be, under better circumstances, a great company is nothing" if it doesn't have a cushion of capital to weather downturns.

"We've never forgotten this experience," he adds. "It's made us more conservative (investors). In a way, I'm glad it happened because it changed our thinking about investing."

Jim Gillespie

CEO of the national real estate brokerage of Coldwell Banker

Biggest mistake: Began saving too late.

After Gillespie earned a graduate degree in recreation and park administration in 1968, he says, "Like most people in their 20s, I had a good time." He worked as a grade-school teacher and coached sports, and then worked with youth programming at two YMCAs before becoming an executive director at a YMCA branch.

"When I was 22, I was not thinking that I'd ever be 62 and looking at retirement," says Gillespie, 62. By the time he started his career in real estate at age 30, he had nothing saved.

"I lost eight years of investing," he laments.

Of course, he's since made up for lost time. For several years, he and his wife, Jenny, bought a rental house each year. They now own nine rental houses, two apartment buildings and a small office building. "The rents on the properties are like dividends on stocks," Gillespie says, "and we've seen what appreciation has done."

What's more, they get to deduct the depreciation of the residential buildings on their taxes over 27 1/2 years, according to the IRS tax rules. Then, once the depreciation runs out, they sell the properties and reinvest the proceeds in another rental property. This step allows them to postpone paying taxes on the capital gains and start the depreciation process all over again.

"You can't beat it," he says.

What he would have done differently:

"I would have listened to my employers and opened an IRA or whatever the savings vehicles were then. I think that was before 401(k)s. I did not pay attention then and, to this day, do not know what the savings vehicles were" in the late 1960s and early 1970s.

"Crazy, but this is still a problem with most young citizens," he says.

Robert Rodriguez

Manager of FPA Capital and FPA New Income funds

Biggest mistake: Overconfidence.

Rodriguez would pass anyone's definition of a cautious investor. FPA New Income, a bond mutual fund, hasn't suffered a losing 12-month period since Rodriguez began managing it in 1984. FPA Capital, a stock fund, has outperformed the Standard & Poor's 500-stock index by an average of 6.36 percentage points a year over the past 15 years.

Rodriguez, a value investor, looks for beaten-up stocks and waits for them to return to Wall Street's favor. Usually, that works. But sometimes, a fallen company is just a bad investment. In June 2000, Rodriguez had a big bet on Conseco, an insurer whose stock had fallen on hard times. After Conseco bought Green Tree Financial, which made subprime loans on mobile homes, its stock tumbled from $20 in May 2001 to $4.40 in June 2002.

Rodriguez owned about 21 million shares of the company's stock in FPA Capital and $60 million of its debt in FPA New Income.

Things only got worse for Conseco. Financing dried up, management changed a key element in underwriting loans and the company went bankrupt. Rodriguez wound up on Conseco's bankruptcy committee after the company filed for Chapter 11 protection in August 2002.

"Conseco is my worst and the fund's worst investment failure since I began managing (it)," Rodriguez wrote to his shareholders in September 2002. "In total, the Conseco securities subtracted 3.5 percent from the fund's performance."

"We were unaware of what was going on in the environment, and even the ratings companies didn't know," Rodriguez says now. "I misevaluated some of the risk in the bonds. I did my penance."

What he would have done differently:

"Always be suspicious," Rodriguez says. "Don't think you know more than you really do. We have become much more circumspect about the ratings companies and about structured finance."

It was an invaluable lesson, he says.

FPA avoided the problems of bonds backed by subprime mortgages that have plagued the credit markets this year.

As for making mistakes, "It's healthy," Rodriguez says. "It reminds you that you're human."