Financial success comes from avoiding mistakes. Take a red-hot cow iron and brand the below three common mistakes into your leather pocket book:
1. No Plan.
Putting one’s money any old place, like in a cookie jar or a low-yield savings account, is not a plan.
A plan means determining your financial goals and objectives, setting a level of risk, diversifying your investments, tracking benchmarks, and periodically reallocating your portfolio. There are people in the financial industry that can help you create a plan along these lines— more about them later.
Stick with the plan. If investing in that racehorse sounds like a great idea, then do so only with money you can lose entirely without straying from the plan.
2. Starting too Late.
Starting too late forsakes the power of compound interest.
The second strongest power in the universe— after a baby’s suckle— is compound interest— which is the phenomena of money begetting more money, begetting more money, begetting more money, and so on.
Starting too late induces poor decision making.
We become like gamblers trying to double our small stake with a few throws of the dice. If the dice are unkind, we lose it all. About the worse thing that can happen is losing our entire stake, because then we can’t partake in the compound interest phenomena.
3. Misplaced Trust in Financial Advisors.
Bernie Madoff, anyone?
Stay away from money managers or advisors promising outsized gains. As a rule of thumb, “outsized gains” are practically defined as any gains that beat the market averages over time. No manager beats the averages very long… Don’t use just one manager, either.
You can do it.
This article written by Campbell Venn