Avoid making big financial mistakes


3. Plan for your retirement when you retire

Karen Altfest, executive vice president at Altfest Personal Wealth Management, cringes when she recalls an encounter with a recent retiree. “The man said, ‘Could you help me find out if my portfolio will last until I retire?’ I asked him when he was planning to retire and he replied, “I retired last month. “In the mind of Altfest, the question came years, if not decades, too late.

It’s a tough situation, she says, when people don’t start planning for their golden years until the day they retire from the office. “These people lose the time factor in planning their goals, which means the advisor is limited by…the client decisions that have been made to date (and may not be easily reversible) and the assets that currently exist.”

That’s not to say a plan that includes things like estate planning techniques and tax strategies can’t be put together at the 11th hour, Altfest adds. She reviewed her client’s portfolio and assets, talked to him about his risk tolerance and financial goals, explored the costs of staying where he lived versus downsizing. “What I couldn’t do was tell him how to save more and plan better for a retirement that was still years away,” she says.

The fix: A better approach is to develop a plan in the years leading up to retirement, she points out. “If he had called me a few years earlier, I might have walked him through various ways to prepare for his future and that of his family,” Altfest says.

4. In pursuit of the latest investment fashion

From Merriam-Webster: mode (noun): a practice or interest followed for some time with exaggerated zeal: CRAZE.

Whether it’s similar stocks like GameStop, cryptocurrencies like Bitcoin, or blank check companies called Special Purpose Acquisition Companies (SPACs), investing in fads can be dangerous for your financial health, says Jan Blakeley Holman, director of advisor education at Thornburg Investment Management.

Holman is not a big fan of Bitcoin, the extremely volatile digital currency that has made many rich but also inflicted devastating losses on many others due to huge downdrafts after hitting all-time highs.

“It’s hard to avoid all the hubbub around Bitcoin,” says Holman. It’s in the news, in conversations on the golf course and at the dinner table, and even in Super Bowl commercials, she notes. There’s only one problem: “The jury,” says Holman, “still doesn’t know if cryptocurrencies are sustainable investments.” Right now, she says, Bitcoin looks very speculative. And while everyone wants to get rich quick, Holman offers a dose of humility: “History is littered with tales of fashionable investments that bubble up. From tulip bulbs to dot-com mania, all bubbles eventually burst and fall back to earth.

The fix: Stick to established investments such as stocks, bonds and real estate, and diversify your investments to avoid having all your eggs in one basket. And if you want exposure to bitcoin, make sure it’s only part of your overall portfolio and use the money you can afford to lose.

5. Let emotions dictate portfolio movements

The emotional impact of investing can be costly. This could mean getting caught up in the euphoria of a bull market, for example, and betting everything on stocks and buying when prices are high. Or, conversely, let fear and panic scare you off the market and sell low when the stock market has already fallen off a cliff. “The emotional roller coaster is responsible for more wealth loss than probably any other factor,” says Neel Shah, Certified Financial Planner and Estate Planning Attorney at Shah Total Planning.

Ignoring proven financial principles, such as buying low, selling high and staying the course during market downturns, is a recipe for investment failure, adds Thorne Perkin, president of Papamarkou Wellner Asset Management. . “Paradoxically, the stock exchange is the rare store where people rush to exit at the sight of reduced prices – when everything is on sale,” he says. “While it can be difficult to stay the course when financial markets are tested, history has shown that steadfast investors reap the rewards. Investors are well advised to exercise patience and use a long-term, non-reactive investment horizon. Rome was not built in a day.”

The fix: Maintain a disciplined approach and regularly review your risk tolerance to ensure you’re hitting your goals, Shah says. If you think you’re prone to panic when buying or selling, get a financial professional to guide you.