Monday, October 27, 2014

What's The Biggest Mistake That Will Affect Your Retirement?

What's the biggest mistake that will affect your retirement?
This past week I found myself in a conversation with someone who, upon learning about my line  of work, asked what I believe to be an extremely crucial question. I’d even venture to say that, in my humble opinion, it is the most important question every single person accumulating a retirement nest egg needs to ponder:

What is the one prevalent mistake
most folks make to hurt their retirement aspirations?

I’ll admit that the question came as a bit of a surprise to me, because the line of questions I usually hear in such settings has more to do with which stocks/funds people should own or what my thoughts are about folks’ current investment allocations.

That said, here is my answer to the current – and crucial – question.

Most folks spend their entire working years believing that all it will take to have the retirements of their dreams – moneywise, of course – is to focus on saving as much money as they possibly can.

Make no mistake: I’m not saying that saving as much money as you can is not a good thing. It is very important, but it’s not all you’ll need to do if you intend to hit a financial home run. The KINDS of investments you’re pouring your contributions into is far more important, in the sense that if you have a bunch of lousy underlying securities/funds, no amount of money is going to change that reality. Instead, you are likely going to end up wasting most or all of the money and the effort you put in.

What if you discovered that your investment vehicle had unusually high fees that were draining your money? Should you (or would you) still contribute as much money as you could to it?

While the virtue of saving the most you can is definitely a great idea without any reservations whatsoever, I’d suggest that WHERE your money is actually is much more crucial. What I’m trying to tell you here is that before you make the next contribution into your retirement nest egg, make sure it doesn’t have any holes you’re unaware of. One of the most devastating things anyone can face is discovering that they’ve been financing someone else’s lavish lifestyle, instead of supporting their own retirement, only after it’s too late to do anything about it.

Happy retirement!

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