People make financial mistakes all the time. It’s a fact of life. Eve the shrewdest and most adept individuals can fall victim to human error and judgment.
That’s why the best way to protect yourself from making these mistakes is by doing your research before you approach any situation that can affect your financial health, or employing an individual with the skills and know-how to do that advice for you.
Most people though refrain from this type of research when starting out on a new venture. However a solid foundation is key when making any financial decisions.
One big area where people make common financial mistakes on their own is in the investment markets.
Most investors aren’t full-time stock evaluators, but many American’s are in fact deeply invested in the stock market. For those who decide to invest on their own, the biggest mistake is investing in stocks that have performed well in the past or that have already reached their height in terms of price.
It’s important to remember when investing that past performance is no indicator of future results. Likewise betting when the stock has hit an all time high is a recipe for disaster. For even the best stock pickers, the market can be unwieldy.
These ideas aren’t confined simply to the stock market. They also apply to assets in real estate and other speculative vehicles like gold and silver.
Worse than these common mistakes though are the ones that don’t seem like financial mistakes at all: listening to the advice of people with no personal financial expertise at all.
Friends, co-workers and family may all be cherished individuals in your life but their opinions on things like your 401(k), stock investments and real estate aren’t the same as advice from professionals in these fields.
While it may be tempting and even rewarding to listen to your loved ones, in the long-run it could hurt your financial well-being
Professional advice should be an important part of your overall financial strategy however there are certainly plenty of simple things that everyone can do to improve their situationâ€”contributing adequately to employee retirement plans, assessing your investments on a regular schedule, keeping your credit down and your savings high. These are the hallmarks of creating a secure long-term financial foundation.
For those looking for an even more in-depth approach to their financial health the benefits of a professional adviser can show you a number of items where you can improve. Competent advisers can help you eliminate debt, build cash reserves, buy the right insurance, save for college and retirement and help manage your various investments.
Because each person’s situation is unique, professional advisers can help match your needs with what is currently available in the financial marketplace. Rather than giving your generalities and all-or-nothing advice like your friends, family and co-workers, a professional financial adviser has the experience and expertise to give you personalized recommendations that meet your needs.