Financial security should be more than just a future hope. It should be your expectation. Investing for retirement throughout your career is crucial for financial security in that it allows you to take advantage of compound growth and helps you build a significant reserve fund. The sooner you start and the more consistently you save, the greater the likelihood of achieving your goals and enjoying a comfortable and worry-free retirement. Investing should not jeopardize your ability to meet current financial obligations or put you in a financially precarious situation. If you're unsure, it's best to consult with a financial advisor who can help you determine an appropriate investment strategy given your financial circumstances.
FOUR COMMON INVESTMENT MISTAKES
1. The Market-Timing Myth
Every investor knows the secret to stock market success: buy low and sell high. The trouble is nobody can consistently time investment moves to make this strategy work. There is no formula for market-timing magic.
Even so, for the investor who works with a short time horizon, the lure of what could happen under the buy-low-sell-high scenario is often irresistible. A jump in the price of a particular stock creates a “had I but known” mindset, leaving the investor drooling over the potential discovery of the next “great timing” opportunity.
In a thirty-year period, could you spot the nine months that would make a difference? If you missed them, your return would be no greater than that afforded by Treasury bills. In addition, by investing in stocks you would face significantly more risk.
2. The Past-Performance Pitfall
Many people pick investments simply because they have been profitable in the past - even though there is no guarantee an investment that once performed well will continue to do so.
3. The Safety Slip-up
In the financial world, safety does not necessarily equal wisdom. Some conservative investors, fearing the downward swings of an uncertain economic market, ignore their need for a healthy rate of return and squirrel their resources away in the least-risky investment available. U.S. Treasury bills, bonds, and other guaranteed investments may provide a safe harbor - yet such conservatism offers no potential for maximizing financial rewards.
4. The Aggressive agenda
On the flip side of the conservative coin is the aggressive investor who thinks that time is short, that he cannot afford to wait, and the smartest financial strategy is to pursue the highest-yielding investments he can find - regardless of the risk involved.
Smart, careful planning paves the way to a peaceful retirement and frees you from worry. At Servant Solutions, we commit to helping you get there wisely. The stewardship of resources is an ongoing process, and we’re here to serve you throughout your journey. We’re just a phone call or email away.