Monday, 22 July 2013

These Investing Mistakes Could Harm Your Plan For Retirement

Constructing a retirement plan may seem far off and of little current consequence at the moment, dependent (of course) upon your age. Regardless of how many years you have left to plan, it is imperative that you take the necessary steps to ensure a comfortable future. As such, planning for your retirement ahead of time, can definitely help you greatly in the long run and in turn dramatically improve your odds of long-term success; by avoiding the most common and potentially most costly investing mistakes.

Generally speaking there are are three common investing mistakes that if avoided, can ensure an improved retirement plan and stronger portfolio; that promises investors a safe and enjoyable investing experience. These are: failing to diversify, unnecessary fees and investing too conservatively.

1. Failing to diversify is a common mistake among investors, and your portfolio should always have a mix of asset classes. The mixture reduces the risk of any one asset dragging down the total investment. Financial planners and advisers, and a plethora of online and offline experts and materials, can offer input on specific ways to allocate that apply to your individual situation.
2. Unnecessary fees can ruin a retirement plan, as they can get very high and very fast. Retirement plan fees can run as much as 4 percent annually. Seek out a plan that charges about 1.5 percent, including mutual fund fees. If fees for the plan offered by your employer seem extremely high, consider contributing enough to obtain the maximum employer match. Then save additional for your retirement in other savings vehicles of your choosing that carry lower fees.
3. Investors have been understandably wary of aggressive investments since the market crashed in 2008. But investing too conservatively can be a risk, too. This is especially true considering the risk of inflation. Playing it too safe by relying on bank certificates of deposit or money market accounts can lock money into very low-interest situation. Balance the risk with safer investments as you get closer to retirement.

Although there are many risks to consider when investing, failure to properly address these three points will certainly have an adverse effect on your long-term investment success and are likely to harm your plans for retirement.