Hello SOTGC Community,
I was recently interviewed for an article about retirement savings mistakes that appeared in the Wall Street Journal’s MarketWatch. Here are the four biggest blunders my colleagues and I see on a regular basis.
1) Freaking out when the market goes down. Remember 2008? A lot of people couldn’t bear looking at monthly declines in their retirement account and cashed out at the worst time. The problem is that they didn’t get back into stocks when prices were low and missed out on a five-year period of excellent gains. If you have a long-term time horizon (seven years or longer), the stock market is one of the best ways to grow your wealth. Don’t let emotion trump logic.
2) Cashing out your 401(k). Sometimes when people leave the corporate world to start a business, they cash out their 401(k), despite having to pay penalties and taxes. Then, if the business struggles year after year, they don’t have any money to put away for retirement. Unless the world is coming to an end, do not tap your 401(k) to start a business. And when you have a business, make sure to set up an individual retirement account such as a SEP IRA.
3) Relying on a friend without doing your homework. When looking for a financial advisor, some people rely on the recommendation of others. If you are searching for someone to manage your money, ask for an introductory meeting either in person or via video call, and bring along a list of questions. What may be a good fit for your friend may not be right for you. I explain how different types of financial advisors are compensated and what questions to ask in my book, Every Woman Should Know Her Options.
4) Deferring investment decisions to your husband. We don’t like to think about it but divorce and death do happen. More than 90 percent of women at some point in their lives will have to make investment decisions on their own. Why not learn a little bit now when you’re young so you won’t be left in the dark when you’re older? My Summer Shape-Up Program may be just what you need.
Want more tips like this? Sign up for my monthly newsletter at www.theoptionslady.com. Please share this article with other women who might find it helpful.