As you enter the home stretch of your career before retirement, perhaps in your 50s or early 60s, it’s normal to feel a bit of anxiety. You might worry that you haven’t saved enough, or that you won’t be able to retire when you had planned. Sometimes, these emotions can lead us to make bad judgment calls with our money. As you continue to work and plan for retirement, keep your eyes open for these common investment mistakes. Stay mindful of the decisions you’re making, and hopefully you can prevent any drastic missteps.
Short-term thinking. Sometimes people panic and sell off assets due to a temporary slump in the market. Other times, you might find yourself avoiding opportunities that would lead to slow, long-term gains, because they don’t appear to be all that exciting. Even worse, you might feel tempted to engage in risky investment practices, in hopes of making a large amount of money in a short time. Most of the time, it is better to view investing through a long-term lens. Getting in a rush can backfire.
Borrowing your own money. This is another area where short-term thinking can prevent you from reaching long-term goals. Borrowing money from your retirement fund is almost always a bad idea. No matter what your short-term goal might be, keep in mind that even if you can repay the amount you borrow, you cannot repay yourself for lost time. There is no way to make up for the time that your money would have accrued compounding interest.
Becoming too entrenched in your long-term plan. Yes, we just said that you should focus on the long term. But we don’t mean that you should make a few investment decisions in your thirties, and then forget about your retirement fund until age 65. You do need to analyze the market and rebalance your portfolio periodically. Picture yourself as a sailor who charts a course, but periodically needs to adjust the sails, in response to changing currents or weather conditions, in order to stay on course.
Competing. We all know someone who is so competitive, they often make mistakes due to their over-focus on “winning”. If you find yourself fixating on “beating the market”, keep in mind that your primary goal is to prepare for a secure retirement. You’re not competing in an investment contest.
Doing it all alone. The financial world is vast and complicated. Understanding and navigating it is a full-time job. Trying to do it alone can result in missed opportunities or unforeseen negative consequences. But that’s why we’re here! We do the difficult work for you, so that we can help guide you through the decisions you will need to make in the years to come.