January 2020 - 12 Common Financial Mistakes to Avoid in 2020
Just as to-do lists can be a key part of planning, do-not-do lists can be helpful reminders to avoid mistakes that others have made.
Avoid investing based on a whim or a tip. Don’t invest a certain way just because a friend or colleague does. Instead, be thoughtful and strategic.
Don’t look at financial decisions in isolation. Think about how they affect or are affected by other elements. For example, when deciding on your asset allocation, keep all of your investments in mind, not just those in a particular account.
3. Not paying yourself first.
Saving should be your top priority. Put money aside with every paycheck. It's easy to do through payroll deduction or a similar automatic system.
4. Not taking advantage of time.
Compound growth is like a gift from Father Time. If you wait too long to save for retirement, you will have lost tremendous potential growth. As a result, you might have to save significantly more later in your career, when many financial needs compete for your attention and your budget.
5. Not paying attention to risk.
Risk and return tend to go hand-in-hand. Investments that offer higher potential returns, such as stocks, have elevated levels of risk. In contrast, conservative investments, such as money market accounts or stable-value investments, fluctuate very little, but they offer limited growth potential. Think about risks, as well as expected returns.
This material was prepared by LPL Financial. This material is for educational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.