1. Changing investment strategies based on emotions

It never feels good when the market goes down. And seeing your account value go down is never pleasant. The emotional side of you wants to stop the pain. In other words, pull your money out of the market. Then when the market goes up, you want to be a part of the party and put money in! Analyze what you are really doing when this happens. You are selling an investment low, then buying it back when it costs more money. Does that make sense? Would you sell your house when the price went down and then buy it back when the price went up because it was worth more? No. No you wouldn’t do that. So why do that with good investments?

2. Not being honest about retirement costs

I see this all of the time. People want to retire so much that they choose to tighten the belt when they budget for retirement.They hack things out of their life right and left on paper. Then they try to live it and find that the parameters are totally unreasonable. If you like to travel, then you like to travel. If you like to golf, then you like to golf. Don’t stop working too early just to be done, then punish yourself for the rest of your life. A few extra years of work may make the difference between having that annual vacation for the next 20 years or not. Think about that.

3. Not Saving Early Enough

Don’t be this person! By saving earlier in life, you don’t have to put as much away each year to reach your retirement goal! All due to the magic of compounding.

Starting at age 25, if you invested $3500 a year at an 8% return, you would have over $1,000,000 at the age of 65. That’s it! Only $3500 a year!

If you wait until age 45 to start saving, then you have to invest $20,000 a year for 20 years to get a million dollars. That’s quite a difference. Don’t ignore the power of compounding. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

4. Not practicing good asset allocation

You need to spread the love in your portfolio, so to speak. Putting all of your investment dollars in one basket is never a good idea. This year’s hot performing asset class might be next years worse. Seek balance in all you do, including investing. Consider seeking the help of a financial professional for advice. Asset allocation does not ensure a profit or protect against a loss.

5. Leaving your 401k behind

You got a new job. Yay for you! Don’t forget about that 401k that’s been sitting there. You took the time to invest in it. Take the time to explore your distribution options. You can be losing out on the opportunity to grow your nest egg if you ignore your money! A good retirement plan is like a garden. It needs to be tended to and watched over to thrive.

Sharon L. Herman AAMS, ADPA is the CEO of Silver Key Wealth Management, and affiliated with LPL Financial, the largest independent broker/dealer* in the United States.  www.silverkeywealth.com *Financial Planning Magazine (June 1996-2013 based on total revenue)

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Financial Partners, a registered investment advisor and separate entity from LPL financial.

Ms. Herman may only discuss and/or conduct transact securities business with residents of FL, MI, GA, VA, NJ, TX. www.finra.org. www.sipc.org

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