7 Financial Mistakes People Make According To A Guy Who Manages Millions
Laura K. Inamedinova ,
Investing is a complex and challenging issue. There are lots of experts who claim to know the best-guaranteed investment strategy and the best way to structure investments for secure and optimal growth.
But unfortunately for the average investor, it is rarely so black and white and even veterans of the industry get it wrong on a regular basis.
http://ift.tt/1RDVsx1
While everyone may want to be Warren Buffet, the reality is that the market cannot be scientifically predicted.
~~~
Laura K. Inamedinova ,
Investing is a complex and challenging issue. There are lots of experts who claim to know the best-guaranteed investment strategy and the best way to structure investments for secure and optimal growth.
But unfortunately for the average investor, it is rarely so black and white and even veterans of the industry get it wrong on a regular basis.
http://ift.tt/1RDVsx1
While everyone may want to be Warren Buffet, the reality is that the market cannot be scientifically predicted.
~~~
Misinformation, misconceptions, and misconstrued facts are the bane of everyone who has put money into the market to one degree or another.
To learn more about the top seven financial mistakes the average investor makes, I spoke with Paul Adams, founder and CEO of Sound Financial Group, a Seattle-based investment advisor and long time member of the Entrepreneurs’ Organization. Here are the top seven mistakes Adams sees people make:
1. They build a castle before building a moat
People put all their focus into building an investment strategy before ensuring they are financially protected and secure. Adams says investors need to ask questions like, “Can your current plans still complete if you are sued, you are unable to work due to sickness or injury, and could your family fulfil your current plans for them if you died?” Focusing on the future is important, but not having a solid foundation can lead to financial disaster if things do go wrong.
2. They have no clear vision for the future
Adams says, “People need a vision before talking to an advisor. Before you make any decision you have to know where you are going. An airplane, due to wind, weather, and traffic from other aircraft has to constantly adjust its path. This causes them to deviate from the most direct course 99% of the time.
While planes are constantly off course, they are always arriving at their destination. If you have no destination in mind… where are you arriving?”
3. They are sold on a story instead of a plan
Another common mistake is people picking an advisor based on the story they tell instead of a concrete strategy. Adams asks, “Is there a person telling you they can outperform the market? Then you are being told a story. There is no empirical evidence that fund managers can consistently pick stocks that will outperform, and even though some managers do, we have no way to pick who they are ahead of time.”
4. They don’t understand the difference between not being able to afford something and going against a financial strategy
In today’s world, getting caught up in buying what you cannot afford is an all too common problem. To fix that tendency requires a simple mindset shift. As adams says, “Investors need to set a strategy for your life and your finances. You need to have a strategy of spending, saving and investing.
This gets you out of the afford conversation. If you are asking yourself, ‘Can I afford this?’ you know you are missing that strategy. You need to fend off consumption and poor investment decisions with your strategy. Ask yourself, ‘Is this consistent with my financial strategy?’”
5. They fail to truly understand the fees and the power of compound interest
Tony Robbins’ infamous book about money raised the red flag on fees and it is still a mistake that many make when investing. While fees can appear to be small, when you factor in compound interest, they can become much larger than you would ever expect.
Over the course of your career, or after decades of saving, fees can cost thousands if not hundreds of thousands of dollars.
6. They don’t invest time to truly understand their investments and financial health
Many people spend just two hours per year talking with their financial advisor. Considering that your financial health is so important, it is not something that should be taken so lightly. Investors who fail to put in the time often pay the price later in life.
7. They don’t plan to be around as long as they should
The good news is that people often live longer than they anticipated. The bad news is, not having a financial strategy that goes the distance can make some of your final years the worst. Using data and trends, investors can create plans that take into account longer life needs and customize a strategy accordingly.
http://ift.tt/2aajEEP
Tony Robbins’ infamous book about money raised the red flag on fees and it is still a mistake that many make when investing. While fees can appear to be small, when you factor in compound interest, they can become much larger than you would ever expect.
Over the course of your career, or after decades of saving, fees can cost thousands if not hundreds of thousands of dollars.
6. They don’t invest time to truly understand their investments and financial health
Many people spend just two hours per year talking with their financial advisor. Considering that your financial health is so important, it is not something that should be taken so lightly. Investors who fail to put in the time often pay the price later in life.
7. They don’t plan to be around as long as they should
The good news is that people often live longer than they anticipated. The bad news is, not having a financial strategy that goes the distance can make some of your final years the worst. Using data and trends, investors can create plans that take into account longer life needs and customize a strategy accordingly.
http://ift.tt/2aajEEP
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