Fullerton
Not many people get through life with a perfect investment strategy that all comes together smoothly in the end. Lots of us hit roadblocks along the way, but try to avoid these five common retirement investment mistakes.
- Failing to take advantage of tax breaks. There are many tax-favorable 401(k) retirement plans out there, as well as IRAs, that help you by giving you a boost in tax breaks. Don’t pass them up, especially since these tax-deferred earnings will compound over time, says Bankrate. Likewise, take advantage of any employer matches with your 401(k). It’s free money!
- Not saving enough. This seems pretty obvious but it’s one of the top things that will trip you up and prevent you from having the retirement you want. Not only should you be socking away money in your savings, you should also be investing enough in your 401(k). With the average contribution rate at six percent, with a 50-percent match from your employer, you should be saving about nine percent of your salary every year. Even nine percent isn’t enough. However, it’s far better than zero.
- Falling victim to high fees. Those fees charged by anything from employer-sponsored plans to mutual funds can really add up, which leaves you with less compounded money and a leaner retirement budget at 65. With plan fees as high as four percent, you need to approach your retirement proactively and know what you’re paying for. Make wise investment choices to negate those high fees, and always inquire exactly as to how much the fee is and what it’s for.
- Making on-a-whim investments. While being a follower may pay off sometimes, it can also lead you into hot water. Many people aimlessly follow other investors as the market goes up, investing in hot stocks of the moment with too much aggressive risk. They get caught up in the excitement of the moment only to – often times – lose a lot in the end. Same with the opposite: too-cautious investors who save religiously and never take risk. Both parties are failing to come up with a reasonable, well-thought-out plan of attack.
- Making unwise choices in retirement. You may be faced with a large lump sum in your savings account once you retire, but it’s all too easy to spend, spend, spend, and fail to keep saving well into your retirement. A budget is still needed and frugality to some extent should be followed, in an effort to keep that standard of living going into your 90s.
These are all good tips to live by. Just be sure you protect your investments and know who’s handling them. Keep the contact info of a stockbroker fraud lawyer handy at all times for the ultimate in protection.
