Thursday, July 3, 2014, AM | Leave Comment
To select investment portfolio that can give you good returns and can grow your money in the long term – and for retirement – there is always a fear of making mistakes. Some folks for a variety of reasons do make mistakes. However, you can improve your investment returns and lower your taxes by making the right investment decisions.
Here are the most common errors investors make and you should try to avoid them.
Selling too soon
The inclination to sell a losing investment or an under performer for folks over 50. Instead of bailing out, a better strategy is to buy more. However, if an individual stock has been a dog for a long time, dumping it may make a lot of sense.
Changing too much as you age
The age-old adage goes: “If something works, don’t fix it.” It’s wrong to ditch a smart investment strategy just because someone says you should. Even when it is time to make your portfolio more conservative, when you need income to live on, avoid making drastic changes. Invest for both growth and income.
Neglecting to save in retirement
Most retirees will have to keep saving into their mid-70s or beyond because of potential rise of inflation. If you don’t, your income will start to drop and the situation will continue to worsen.
Buying annuities improperly
Deciding what to do with a lump-sum distribution from an employer may be the most important financial decision you ever face. Follow the tips to take Retirement money as lump sum or annuity.
Tapping tax-deferred accounts
Many people withdraw too much from their tax-deferred accounts. Avoid interrupting the tax-deferred asset growth.
Thinking growth and income don’t go together
Actually, if you are careful, they can work together beautifully. Over time, steady dividend increases sharply boost current income. The potential appreciation of the stock takes care of the growth portion of the equation.
In a Nutshell
You can avoid certain obvious and not so obvious mistakes when investing. That way you can improve the performance of your investment.