1. You’re not reassessing your investment strategy
Investing may seem like a simple process, but when you’re not reassessing your portfolio periodically (or as often as necessary), you become oblivious to factors such as market performance, fees, strategy and management changes and how your assets are being allocated. And it’s just as easy to lose money, as it is to invest it. What you should do is analyze your investments according to your time horizon to determine whether you’re taking on more risk than you should. Evaluate risk and performance on an annual (or more often depending on the investment type) basis to ensure you’re not derailing yourself from reaching your financial goals.
2. You trust your financial advisor more than you should
You think your financial advisor is your friend? Think again. They’re just in the business of making money by managing your money. And although your wealth is in the hands of a professional (at least you hope so), ultimately no one will have your best interest in mind, like you will. What I’m trying to say is, don’t be overly confident in what your told. Ask questions, do your own research and always verify how your funds are being managed. Remember, you’re trying to reach your financial goals, not theirs.
3. You’re not diversifying your assets
Sometimes being too safe can be detrimental to your financial goals. If you’re not allocating your assets across different investment types, you may be missing out on opportunities to capitalize. Just because an investment is considered “safe”, “lowisk”, or FDIC-insured, doesn’t necessarily mean it’s the best option to safeguard your investment. Holding funds in lowisk, financial products such as CDs and money market accounts can actually cause you to lose money over the course of time due to the rate of inflation being higher than current interest rates. Additionally, cashing out any of these investments before it’s maturity date can cost you penalty fees and possibly even any interest accrued. Doing your research on how to spread your wealth will not only be a wiser strategy, but will also help offset the overall risk of your investments.
4. You’re addicted…to stocks
If trading stocks feels more like a thrill, than a serious financial decision towards achieving your goals, you may have a ruinous addiction to trading – no, seriously. There’s a fine line between enjoying the approach of investing (with the normal gains and losses) and gambling your money, savings and retirement away. Investors, who find the volatility of the market exhilarating, should stop to consider if it’s more of a game, than a strategy. The downward spiral of a serious addiction could lead you into financial despair, which could ruin more than just your current financial situation. If you feel you may be dealing with a serious addiction, consider telling a family member or seek professional help.
5. You’re still supporting your adult children
If you have children, it can be difficult to put your needs above theirs – especially your financial goals. The problem is, if you don’t focus on growing your wealth for retirement, no one will. Sure, your [adult] kid just graduated college and isn’t making enough to afford that apartment, so you pitch in to help them out, every month, since last year. And you also contribute to their bills (Isn’t that what parents are for?). Sorry moms and dads, it’s time to re-evaluate where your funds are going (or better said, not going) and start thinking of preparing for your future. I’m almost certain your kids would agree that having healthy, financially fit elderly parents is more important.
6. You can’t afford your lifestyle
You have a beautiful, big home, expensive cars, a boat and that vacation property in Florida. All of it was great when the kids were growing up, but do you still need those two extra bedrooms in your home? And that boat? Okay, maybe you do need the boat. Reality is, your financial goals sometimes aren’t attainable without making necessary lifestyle changes. Consider re-evaluating your assets to see what you can downsize and what is completely out of the question (the boat and vacation property are essential for happy retirement living). Simply moving out of your large home in the suburbs into a smaller, yet more comfortable living situation, such as a condo can help you set aside more time and money towards your goals. Even moving to a different state can offer greater tax benefits to help you enjoy life in your golden years.