Retirement & Estate Planning. Financial, Portfolio & Investing Mistakes to Avoid. West Chester PA

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Throughout life we are constantly saving for specific goals. As one goal is reached, we strive for another. Goal attainment is a constant theme throughout all of our lives because it represents growth. Common financial goals include: saving a down payment for a house, saving for college, saving for vacation, or saving for retirement. Most of us will always be saving for something at one time or another. So how do most people go about achieving their financial goals? Itīs simple they save and invest.

While this may seem elementary, the purpose of saving is to defer and accumulate current income for a future purchase. On the other hand, we invest because it presents the opportunity to reduce the amount of time we need to save towards our goal.

Saving is pretty straight forward because it just requires the necessary discipline to stick with it. On the other hand, investing is more complex. What do you invest in? What rate of return can you expect? Is there a better investment, and if so what are the trade offs (i.e. risk). The sheer number of investment options can potentially increase the likelihood of making a choice that could be suboptimal.

So what can you do to reduce your chances of making some of the common mistakes? Some people tend to rely on familiar investing maxims like buy low and sell high, diversify, buy and hold, invest international, etc. No doubt these are good pieces of advice, but they are general statements that are long on wisdom and short on specifics. In order to help you, the following list details common mistakes you can avoid when trying to achieve your financial goals.

Financial, Portfolio & Investing Mistakes to Avoid

Financial Mistakes:

1. Spending more than you earn.

Sound familiar? If you are carrying credit card balances or living pay check to paycheck, you are likely living beyond your means. It is time to put together a budget.

2. Buy depreciating assets.

Are you spending a large percentage of your disposable income on items like cars or expensive clothing? Necessities are just that…..necessary; however, having a new car every few years and wearing the hottest trends is directing your hard earned cash into unproductive areas. Learn to do it for less.

Portfolio Mistakes:

1. Concentration in one asset

Diversification can be difficult if you have a small account, but it is necessary to reduce the possibility of taking large hits against your equity. This yearīs darling could be next yearīs dog, so dividing your account among multiple investments is crucial to prevent a set back in achieving your goals.

2. Sentimental Attachment to an Investment

Attaching a personal meaning or emotional connection to any investment is a big no, no. Maybe you inherited stock from a relative or you own stock in the company you work for. Circumstances such as these illustrate easy ways to develop such an emotional connection. The fact is the market does not care who you are or what you own. An emotional connection can cloud your better judgment and potentially inhibit you from acting in your best interests.

Investing Mistakes:

1. Waiting to Start Saving

No matter what your goal is it is important to begin saving. The mechanics of saving provide important skills that can be transferred to many areas of life, including: goal setting, discipline, focus, and consistency. Letīs not forget that saving can also provide greater financial security and help you realize your goals.

2. Market Timing

Market timing is the act of timing your buying and selling patterns to the rise and fall of asset prices. It is alluring because it can be extremely profitable if you are correct. However, statistics show the vast majority of individuals lose money employing this practice. The market ebbs and flows in periods of relative calm followed by moments of mania. The likelihood of make consistent profits is low even for experienced professionals. People often fall prey to the illusion of easy money. In reality, the market provides an abundance of promising price movements that often reverse course and drain account values.

The investing landscape is littered with pitfalls and mistakes you should avoid, so it can be wise to seek a professional advisor. An experienced advisor can help to accelerate your learning curve and potentially reduce the number of mistakes along the way.

Disclosure:

This material is meant for general informational purposes only. The views expressed by Key Financial are not necessarily the opinion of Royal Alliance Associative Inc.

Investors should note that there are risks inherent in all investments, such as fluctuations in investment principal. No investment strategy, such as diversification, can guarantee a profit or protect against loss. This material should not be relied upon as investment advice. Investors should seek their advice of their financial advisor prior to making any changes to their investment strategy.

Securities and Advisory Services Offered through Royal Alliance Associates, Inc. Member FINRA/SIPC. Advisory services offered through Key Financial, Inc.

A Registered Investment Advisor not affiliated with Royal Alliance.

1560 McDaniel Drive, West Chester, PA 19380

E-mail: pbrennan@keyfinancialinc.com, Phone: 610-429-9050

For more information, please visit www.keyfinancialinc.com.