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1.
Misjudging or miscalculating risk
Many people
don't know what risks they are taking with their investments. And, even when
they do know, they frequently are not being compensated for the amount of risk
they are taking.
2. Making
financial decisions on advice from friends
What works
for one person may not work at all for another. Even beyond personal
circumstances, the timing may just be wrong. For example, many people hear about
last year's hot stock or mutual fund and invest, only to find the investment has
peaked and they are now losing money.
3. Doing
nothing when confused
Many people
are afraid to ask questions, fearing embarrassment. But, doing nothing produces
mediocrity at best, financial disaster at worst.
4. Buying
from a phone call or by mail solicitation
These
products may not in your best interest. When your mother told you "if it looks
to good to be true, it probably is," she was correct.
5.
Putting taxes before returns
Tax liability
is important, but it's not the only concern when you are trying to make money.
For example, a typical taxpayer would come out ahead receiving a 8% pre-tax
return verses a 2% after-tax return.
6.
Purchasing unsuitable insurance
Insurance
salespeople are typically paid on commission. This inherent conflict of interest
sometimes results in people being over-insured. Others are under-insured, not
recognizing risk areas where insurance is vitally needed.
7.
Investing inappropriately
Individuals
often do not allocate assets according to age and risk tolerance. Or, when their
investments aren't performing, they don't know when to hold or sell.
8.
Trading too often
Many people
have gotten hooked on watching individual stock prices and trying to "time the
market." Unfortunately, even when they are lucky enough to pick a rising stock,
the return is frequently wiped out by trading fees and taxes, not to mention the
loses from other stocks that declined.
9.
Accumulating costly debt
A reasonable
amount of debt is normal, even expected, in today's society. However, if you are
locked into paying a large percentage of your income to serving that debt, it
can prevent you from investing in your future or even catapult you into
bankruptcy if unexpected troubles occur.
10.
Failing to consider financial goals
Many people
are in a "spend as you go" lifestyle, failing to save for future events or
protect their families from tragic circumstances. Time is money and delay
only increases the chance of not being able to provide for yourself and your
family as you would like.
One should consult with a
qualified financial planning professional prior to implementing any financial
planning strategies. If you
are a real estate planning, insurance, tax or mortgage professional
receiving this newsletter, please call our office and introduce yourself to us.
We are always seeking to grow our referral network and expose more service
professionals to our client base. |
