As the New Year unfolds, it's an opportune time to reflect on our financial habits and resolve to avoid common mistakes that can hinder our financial health. In the intricate world of personal finance, it's crucial to embrace strategies that foster growth and stability. However, equally important is recognizing and steering clear of pitfalls that can derail your financial journey. 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. From the perils of impulse investing to the subtleties of managing risk and diversification, each point serves as a cautionary tale against common yet avoidable mistakes.
Avoid investing based on a whim or a tip. Avoid the temptation to follow the investment decisions of friends or colleagues without due consideration. Instead, opt for a well-considered and strategic approach to investing.
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.
Some of this material was sourced from 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.
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About the Author
Bleakley Financial Group
For over 35 years, Bleakley Financial Group has been providing customized financial planning and wealth management services to a diverse array of clients across the country. Our team consists of more than 100 financial professionals, from financial advisors and research assistants to client support associates. Bleakley services over $9.4 billion in client brokerage and advisory assets across four different custodial platforms (as of 12.31.23).