As you are approaching retirement, don’t make the big mistake of gambling with your savings. Poor investing or paying unnecessary fees and charges can take a big chunk out of your nest egg and derail your retirement plans.
Here are some mistakes that you need to avoid in your 60’s and even in your 20’s.
- Investing in things that you don’t know anything about. Keep clear of all new investment schemes that you are unfamiliar with. This includes seminars with free dinners thrown in. Don’t allow high pressure salesmen to talk you into parting with your hard-earned money. Take your time learning about new potential investments then invest in small steps.
- Don’t be persuaded to invest a large portion of your retirement fund in a stock that is supposed to be “the next big thing”, it is too easy for you to lose everything. Investing is a skill that you need to learn to be successful and a process called asset allocation. If you want to play the stock market do it with small amounts of money.
- If you are lucky enough to have the choice make sure that you participate fully in your employer’s savings plan. Don’t ignore the “free” money that your employer is contributing towards your retirement savings when they match your investment, it is the equivalent of extra earnings.
- Making risky loans with your money. Private loans can pay you large interest, but they also come with a serious risk. The borrower may go bankrupt or be unable to repay the loan and you could lose everything. If you want to go into this type of investment it should only be a part of your overall investment strategy and you should only use a small amount of your retirement money. On the other hand, you should not put too much money into “safe” investments which typically don’t earn very much, as your earnings could be eaten away by inflation.
- Don’t put too much money into real estate deals. Some deals promise high returns but if property values don’t rise but actually fall, you might have to ride it out until prices rise again or sell the property at a loss. Real estate can be a good addition to your retirement fund portfolio but again don’t put all your eggs in one basket.
- Don’t overlook all the costs and fees associated with maintaining your investments. Though they might not appear to be much when you are younger, over the years they can really add up. Compare fees when you start investing and keep checking them over the years, as your investments grow that !% will translate into more money than it did originally. It might make sense to change your plans if your fees get high or if you realize that they are higher than you thought.
The bottom line is that your retirement money is not for gambling, it must provide you with a reliable income as you get older. If you don’t do your homework and lay out a careful investment plan early in life you can only blame yourself if you suffer losses.
From an article by Dana Anspach