Achieving financial stability, and subsequently, financial independence once you retire, is the primary goal of any investor. However, when comes to money matters, there is always a small probability that people can make a mistake. While beginners can be expected to make mistakes, sometimes even seasoned investors end up with a loss because of a bad investment choice.
But if you are prepared and know exactly what to avoid, you can cruise towards your financial planning goals with ease. Here are some mistakes that most investors make and you should avoid making.
- Ignoring Retirement Till It’s Too Late: It’s highly unlikely that you’ll continue working past your 60s. In all probability, you’ll want to retire well before you reach that age. But if you start financial planning for retirement when you’re in your late 40s, there’s only so much you can grow your investment by the time you retire. Remember, you WILL retire at some point of time, so stop waiting to start planning for something you already know is inevitable, just start now.
- Forgetting That Growing Old Requires Money: As you grow older, you need to factor in a lot of things that many investors fail to account for while making their financial plans. You have to consider everything from possible health care costs, long-term care costs, to unexpected visits to the hospital. When you’re young and healthy, it’s easy to forget about all these while creating your financial plan.
- Putting All Your Eggs In One Basket: Diversify. Diversify. Diversify. Never put a large chunk of your investment in one place. Break it down and spread it across a good mix of long-term and short-term investment channels.
- Trying To Time The Market: Let’s be very clear about this right from the get-go – No one can time the market. The market fluctuates depending on countless factors, a major part of it being people, a factor that is as unpredictable as it gets. So stop worrying about the best time to invest, sit with a certified financial planner and get a better understanding of how you can get the best out of the prevailing market conditions. Don’t miss out on a golden opportunity just because you decided to sit and let it pass by.
- Working With The Wrong Financial Advisor: Does your financial advisor understand you and your financial planning goals? Are they qualified to deal with the nuances of your future plans, which may be vastly different from that of their other clients? Keep reviewing your portfolio regularly to make sure that you’re on track to meeting your financial goals. If you feel like you’re not moving in the right direction, you might want to look for a new financial advisor.
- Getting Emotional About Investments: Some of the best investors often lose a lot of money as they get attached to a particular stock. The problem is that they mistake familiarity for safety. Just because they’ve had a good run with a particular stock, there’s no way to know how long it will last. It is in your best interests to make sure that you’re wary of any investment that you make, no matter how many times you’ve done it before.
Financial planning & wealth management are serious activities that you should seek expert advice for if you’re not accustomed to the world of investments. A lot of times, amateur investors end up losing a lot of money as they feel like they know enough to do this on their own. However, some things are best left to professionals, and financial planning is one of them.
Get in touch with a certified financial planner today to find out how you can best utilize your time and energy on your investments.