We all make mistakes, but while some can just lead you to have a bad day, others can lead you to have a bad rest of your life. It sounds daunting, but making an effort to save to fund the period of your life when you are no longer working is not a task that should be taken lightly. Fortunately, the tendency for humans to repeat the same mistakes over and over helps us to be able to identify them and in doing so, prevent ourselves from doing the same. Avoid these investing mistakes to prepare yourself for a financially secure future.
- Starting to save too late. For many people in their 20s, retirement is the farthest thing from their minds. However, beginning retirement saving in your 20s will make reaching your savings goals more tangible. The earlier you start saving, the longer you have for your money to grow. If you are past your 20s and haven’t started saving, don’t worry—just start! Saving for retirement should continue throughout your working life.
- Saving too little. This one’s pretty obvious. If you don’t set aside an adequate enough portion of your income, then you will come up short in retirement. As a rule of thumb, many financial planners suggest setting aside 10 to 15 percent of your annual income each year throughout your working life. Of course, as your income increases, so should the amount you save.
- Paying excessive fees. Fees can eat into your retirement savings more than you realize. For example, if you are paying 3 percent in fees, your return will be reduced by a whopping 45 percent! When your compounding goes into the negatives, it can mean bad news for your retirement nest egg.
- Entertaining risk you are not comfortable with. It is more important to eliminate risk on the downside than to entertain risk on the upside. In other words, it’s easier to climb the financial mountain if you do not first have to dig yourself out of a financial hole. If you are not comfortable losing 50 percent of your savings, then don’t invest your money in a place where it is subject to 50 percent losses. The products we provide our clients offer 100 percent protection against losses with reasonable rates of return between 6 and 8 percent.
- Undershooting your savings goal. You may have calculated how much you think you will need in retirement, but is it accurate? Have you accounted for inflation? For health care costs? If you do not feel confident in the magic number you have come up with, then it might be time to consult a professional for help. Reaching the age you planned to retire and then realizing you don’t have enough money to do so can not only be financially devastating, but emotionally devastating.
These investing mistakes can cause you to have a less than desirable retirement, but the good news is, you have the foresight to avoid them altogether. If you want your money in risk-protected investments, but you still want to enjoy stock market gains, the Ty J. Young Inc. team can help. Call us today at 877-912-1919, and continue to follow Ty J. Young Inc.’s Retirement You Earned blog!