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The Five Most Common Mistakes People Make with Their Retirement Funds

What Are The 5 Common Mistakes People Make With Their Retirement Money?

Working for years to build your retirement fund is a rather long journey, but there’s always that goal of one day enjoying the fruits of your labor without having to work a day in your life again. The ultimate dream for almost all people is to live the life that they want with the support of their hard-earned retirement money. And since there wouldn’t be anymore regular income coming your way, you’d want to plan where you would put your funds where they can be best managed and preserved.

Although we have different desires and priorities, we all have but the same aspiration – to live a comfortable life without having to worry about where we would get the cash that we need, when we need it. To help make sure that we spend our retirement money wisely, here are some WARNINGS that we should not ignore.

Blindly taking advice from seminars you attend

Seminars that tell you how and where to invest are fine, but you have to be a keen on knowing and fully understanding the inputs that you’re getting from these lectures. Don’t fall prey to the mere words of the renowned and prolific speakers who dazzle you with their expertise, because seminars are designed that way to get you hooked.

While we’re not saying that these programs are bad, what you need to do is to keep on asking questions and clarifying ideas until you’re fully satisfied with what you want to know. What works for one person may not work for you. If you’re completely convinced about a certain investment advice, get into it using only a small amount and then see how it goes.

Putting most of your money on stocks

Stocks are very volatile and could either make you lose money or gain a lot of earnings. While it can be an exciting ballgame for someone who trades, you are better off participating in the stock market as an investor who’s in it for the long haul.

Before putting any money on stocks, do your best to study to have a firm grasp of what you would be getting into. It is crucial for you to know the market situation which is highly dependent on factors such as the economy, socio-political conditions, and performance of certain industries and companies — things that you need to be cognizant of so you can be aware of the risks involved. Rule of thumb is that you can bet on stocks using only money that you can afford to do without for a long time.

Too much loan exposure

If you’re the type who is confident enough to go after high-yielding investments and not afraid of the risks, then diversify. Risks are always high for these investments so it’s best to use only small portions of your retirement funds.

Investing in illiquid assets

Though investing on real estate is generally one of the surest ways to let your money grow, be very careful about choosing the property. Though the value of real estate only goes up, there are certain deals that may prove to be risky, especially if for some unfortunate reason, there would be slump affecting the area where you invested. You have to look at the liquidity of the asset that you’re purchasing and see how long it would take for you to start earning money from your investment. Do not put your entire money or most of it in just one specific vehicle

Thinking you know it all

Don’t be overly confident because you’re earning a lot from your investments, and think that you already know everything (based on your experience) where to next put your money. Investments are always risky, and so you need to be very vigilant and astute. You should therefore know when to stand by with what you’ve invested and be ready to bail out when the situation calls for it.

Your retirement money controls your future. No matter what and how many expert advice you would seek, in the end it is your responsibility to plan your investment before taking a deep breath and going for it. The key is fully knowing and understanding before making any decision to invest.


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