7 Mistakes We Must Avoid While Doing Financial Planning
When it comes to personal finance, human flaws can throw you off course during your earning years. But as retirement approaches, these flaws have the capacity to do lasting damage. These retirement planning sins can set you back from achieving important goals. So, if you feel like you can do a better job of your retirement planning, here are seven offenses on how to get back on track:
1. Don’t be afraid to seek help
If throughout the years, you realize that your retirement planning becomes complicated, be sure to get help. Being prideful and trying to do things alone may cause you to make irrational decisions. A certified financial planner can help with your individual retirement plan. Larry Luxenberg, managing partner and chief investment officer of Lexington Avenue Capital Management says, “someone not doing this full time will be less likely to spot trouble. When an amateur gets these wrong. It could spell the difference between a comfortable retirement and a much delayed one—or worse.” So swallow your pride when it comes to building a long-term portfolio, and get help if you know deep inside that you need it.
2. Don’t get jealous over what others have
Envy drives people to compete with others. “Driving new cars, acquiring a home in a fashionable neighborhood, and sending the kids to private school to keep up with their friends are surefire ways to minimize your retirement saving potential,” says Mark Petersen, CPA, CFP, and vice president of affluent wealth planning for Carson Wealth. When you try to compete with others financially you are likely to make risky bets and stock picking could lead to a financial disaster. Instead, opt to invest in broad categories of asset classes to minimize your risk.
3. Don’t let anger cloud your judgment
Anger should not cloud your judgment when leaving a job. Irrational decisions tend to be made in the heat of anger. For instance, leaving a job without sufficient planning could wreck retirement savings. “You may be living off that savings if your job search takes longer than expected, and voluntarily leaving employment may disqualify you for receiving unemployment benefits,” says Petersen.
4. Don’t get greedy and chase returns
Investors tend to get greedy and chase returns. But this is often done to their detriment. Luxenberg says “Once a stock or new investment vehicle starts moving, it’s tempting to jump on board. Your friends and family are all making great money at it. Why not you?” However, most people tend to wait until the trend is well-established before they plunge in. “Most investors buy the right things but do it at the wrong time, and that’s enough to sink a portfolio,” he says.