This is the first part in a five-part series adapted from the Ty J. Young Inc. webinar, “5 Major Mistakes Retirees Make and How to Avoid Them.”
Considering a topic as all-encompassing as retirement investing, mistakes are inevitable. However, having the foresight to anticipate your mistakes when planning for retirement can prevent you from making them altogether. Following bad financial advice is something you might like to think you intuitively avoid; however, you may be doing it without even realizing it.
It sounds simple. Why would I follow bad financial advice? The reason is that the majority of the time, bad financial advice comes from the sources that you trust the most. Often, our friends, family members, coworkers and neighbors offer us financial advice. After all, finances are a topic common to all of us—so it’s something we can always talk about.
But here’s the issue. The advice that person is offering may not necessarily be the best advice for you. That doesn’t mean that that person had the intention of providing you with poor advice. But maybe that person is at a different point in life than you are. Maybe he or she is not the same age as you are. Or perhaps that person has a varying level of risk tolerance than you do. Each of these factors could mean the advice he or she is giving is not the same information that will work best in your individual situation.
In other words, here’s how we classify bad financial advice: If someone offers you financial advice, and it doesn’t match what you want for your money, then that makes it bad financial advice for you.
So if the mistake is following bad financial advice, then where can you get good financial advice?
The answer may surprise you. The best financial advice comes from you. You might be asking, how do I get financial advice from myself? It’s actually pretty easy.
A national survey asked questions to people between the ages of 55 and 70 years old regarding their money. Two questions that stuck out to us are:
- What is your number one fear financially?
- What is the number one thing your money provides you?
Considering question one, the most popular answer was “running out of money.” Considering question two, the most popular answer was “security.”
If you agree with the answers to these questions (or even if you don’t), the next step in getting good financial advice from yourself is to ask whether your investments match your answers to those questions.
For example, if your number one fear financially is running out of money, and if the number one thing your money provides you is security, then you should have your money in a place where it is protected from potential risk. Investing your money in a manner that offers guaranteed protection of your principal is the good financial advice you are looking for in that scenario.
Of course, you still need to be able to earn a reasonable rate of return. Is it possible to keep your money protected while still earning a reasonable gain on your investments at the same time? Yes, and it’s something we help our clients with every day.
So how do you avoid following bad financial advice? Ask yourself what your number one fear is financially. Ask yourself what is the number one thing your money provides you. And then ask yourself, “Do my investments match my answers to those questions?” If they don’t, it’s time to make some changes.
Stay tuned to Retirement You Earned for the second in our series of “5 Majors Mistakes Retirees Make and How to Avoid Them.” To learn more about how our Ty J. Young Inc. financial advisors can help you make the best decisions for your retirement, call us today at 877-912-1919!