Top 6 Investment Mistakes
One of my all time favorite video games is Frogger. You remember it, right? To get your frog to safety you have to make some killer joysitck moves to get across a busy street and a dangerous river full of crocodiles. Left, right, left, back forward left. left forward…. Each level gets faster and faster. Make a wrong move and SPLAT—your’e dead. Oh well, try again. Its hours of fun.
Well in real life you dont get infintiy lives, you just get one. YOLO, baby! And when it comes to your retirement, you dont want to be playing it way you play Frogger. Here are six common mistakes Ive seen people make when planning for their retirement.
Paying crazy fees. Listen, nobody is going to work for free. If you want someone to help you take care of your hard-earned dough you have to expect that some kind of fees will charged, fair enough. But be careful. A lot of fees are hidden deep in the financial plans’ documents. Not everyone charges the same so you should ask good questions about it. You dont want to be paying someone to lose your money or be overcharged for services you’re not getting.
Not accountig for inflation. Inflation is simply an index that reflects how expensive everything gets over time. It usaually raises about 2-3% per year. Here’s some simple math to help you figure out inflaton. in 30 years $100 will be worth about $50. Yes, I’m over simplifying but you get the idea. If you make $100k today, it’ll be worth about 50K in 30 years. You’re going to need to accunt for that.
Losses. Taking calculated risks over certain periods of time is understandable but taking constant face punches from the market for extended periods of time is not really neccesary. Michael Jacskon looks cool moon walking but your money does not. There are a few plans available that eliminate losses all together and still give great rates of return. Sounds too good to be true? Maybe. But True Facts—-some index universal life polices perform a such a boss level they make even agressive mutual funds look about as fluid as cold peanut butter.
Taxes. Taxes are as American as apple pie and baseball, but if you dont pay attention you’ll be paying through the nose. Dont feel like paying taxes? No problem. You’ll be 5-year guest at club fed with a roomie named Bubba that will love you long, long tme. Unfornately MOST people pay more taxes than they need to becuase they are either ignorant about the laws or they know the laws and neglect to put the effort in to reduce their impact. Rich people understand tax laws. That’s one of the reasons they are rich. Hey, dont hate the player; hate the game.
Ego is mans biggest flaw. Pride in thinking that he knows more than he actually does get him in all kinds of trouble. Just ask my wife. When it comes to finances it pays to submit as a student to those who are well experienced in earning and KEEPING money. One of my favorite books on money is The Richest Man in Babylon. Its timeless principles are practical and life changing. Too many good people take bad advice from the wrong people, like taking jewlery advice from a brick mason. Even some so-called certified financial planners are inadequate for the job and are just hiding behind a big company name. Most of them are broke themselves. Do yourself a favor and test information against proven princples and evidence. Stay humble, keep learning and you’ll keep your money safe from knuckleheads
Poor Rates of return. Notning is more frustrating than putting your money to work somewhere only to come back and find that it hasnt grown that much at all. Proverbs says, “Like vinegar to the teeth and smoke to the eyes,
So is the lazy one to those who send him.” You hire someone to do a job and he’s just sitting there doing barely anything. Ugh! Money needs be be in a place where it can be put to work and get reasonable returns. Many peole feel a good long term return about 7-10%. A good short term return could be even more. I agree with this notion. The point is money is the happiest when it is out making more money.
Impressed with my stunning wisdom, huh? Well I can assure you my intelligence is limited. But like you I get glimpses of brilliance from time to time so soak it up while you can. So how do you remeber all off these principals? Well I just use the word FILTER to remember. Dont let these things filter your money. FEES. INFLATION. LOSSES. TAXES. EGO. RETURNS. Think of each one as move on your Frogger joystick. Get good at controlling your money with these moves and you’ll be home free.
