If you are not working with a financial planner that has experience and know how in the investment world it is easy to make mistakes. Often the mistakes are made because of bad information or because of misinformation that may be passed on by people that mean well but really don’t understand what they are talking about.
Below are five very common mistakes that people make when trying to plan for their financial future on their own.
• Waiting to time a market – it is impossible for anyone to accurately time the market when it comes to buying or selling stocks, bonds or real estate. When people wait to time the market, or try to do so, they often miss the window of opportunity.
• Lack of a goal – if you don’t have a plan, a goal, in place you will not have a pathway to achieve that goal. This leads to random investing and financial decisions that often become counterproductive and work against each other.
• Making investments without dealing with today – while it is important to save and plan for your financial future, there may be more effective ways to address short and long term financial goals. Paying off home mortgages and car loans can have both short and long term benefits.
• Failing to calculate tax considerations – different investments provide different tax savings at different times. Many people assume that tax savings now are beneficial, but for some individuals it may be more beneficial to pay the taxes up front and then withdraw the money, without taxes, later on.
• Incorrect priorities – you may be convinced that a particular type of investment strategy is a priority when, given your place in your career and your life, it may be a low priority or a completely ineffective option.
Talking with a financial planner allows you to avoid these common mistakes by having a goal, setting priorities and making the investments in a way that has the best short and long term advantages for you and your family.