If you’ve got a retirement plan at work, stocks, mutual funds or other types of investments, you’re already well on your way to savings-land. But, there are 5 common mistakes that will quickly steer you off track, definitely cost you money and potentially screw up your savings for good.
- Mismatching your investment with your goal – If you’re looking for long term money, don’t invest in high risk stocks. Likewise, if you’re on a short term investment strategy, buying tons of bonds or CDs might not be right for you.
- Paying taxes – That’s right! Paying your taxes can be an investing no no, but only if you don’t have to. So, take advantage of tax-free investments (like an IRA) whenever possible.
- Letting your investments languish – Don’t just leave money sitting in a savings account… pull it out an invest it where you can get a higher rate of return.
- Neglecting your research – Spend a little time on your financial plan… do a little research. Make sure you’re maximizing the amount of money you could be receiving. This means checking out all your options. Employer offering an IRA at work? Great! But, is it the best you can do? What are the fees like? Rate of return? Any matching funds? You may be able to find something better with a little leg work.
- Getting too emotional – Investing with your heart and not your head is a great way to loose your entire savings (or at least, minimize your return). Diversify your investments. Don’t put all your money into tech stocks when they’re doing great, only to sell it all when the market takes a downturn. Holding a stock through a minor bad spell is better than selling it low and buying when it comes back up. Be patient and be rational.