Wealth-Destroying Mistakes

Let’s talk about wealth-destroying mistakes. I don’t know if that’s an exciting topic for you but there’s a lot of times these easily avoidable errors that we’ll commonly see when it comes to Retirement Planning. So starting off, it’s trusting a brand over data. So you might be familiar with some of the big name brands in the financial world. And you just sort of go along with the assumption that that is the best option for you. But in comparison, you are going to want to be looking into things a bit further. So, it’s going to come down to more about the strategy. What it that investment manager’s philosophy? What are they trying to do within the portfolio? What about historical returns? That’s going to be important versus just simply making the assumption that, well, I recognize this brand or this name, that’s out there and so we’ll just assume that it’s going to work out. Another error that you could avoid is chasing the high returns instead of capital preservation when it comes to your retirement and building wealth. It involves minimizing losses over time. You’ll want to be cautious especially in those retirement years that you’re not maybe not in that growth and accumulation phase anymore. It’s one where those days of trying to get big 30%, 40%, 50% returns might be behind you. Now it’s more about consistency and protecting your assets. And if another area that you’ll want to avoid is if an investment sounds to good to be true, guess what, it probably is. There’s so many options out there in the investment world. And when you hear something and you’re thinking to yourself, wow that’s the greatest investment I’ve ever heard of, okay, maybe take a second look at that. And determine if there is a certain level of risk that’s involved with that and if that’s something that you’re going to be comfortable with. So you may want to err on the side of caution. Conduct your due diligence. This applies not only to your investments but also to an advisory firm. If you’re looking to go to an investment advisor and work alongside them with your retirement plan, learn some details about that. Sort of how are they structured, what is their overall investment philosophy, what types of investments might they use within your retirement plan? And are they looking at strictly just from an investment perspective or do they talk to you about what tax implications might be or how to structure your income or looking through estate planning, different insurance planning, sort of what are the capabilities of that advisory firm that you’re working with? Another error may be the failure to diversify. You don’t want overload your portfolio in any one stock. A lot of times people will come to us and maybe they worked for a company or they had a family member that worked for a company and they are confident that this one stock will never fail them. And that may be the case or may have been the case for the past ten, twenty that you’ve seen that stock grow which is a great thing but you don’t want to solely rely on just that one stock for your overall retirement plan. You don’t want to hold an excessive amount of cash. This may erode your returns over time, especially during higher inflationary times. If you’re not earning sufficient interest on that cash you want to get that money working for you. Maybe there is failure to adjust the risk as your life stage changes. As mentioned before, if you’re in that growth and accumulation phase while you’re working and really just trying to build that portfolio it transitions to more of a preservation of wealth and income phase during retirement. And maybe in the later years it’s looking to distribute some of those assets. Maybe you’ll want to start by gifting some money to family members or different charitable organizations. Lastly, you don’t want to prioritize wealth over your life’s goals. There is so much more to life to be enjoying and experiencing versus just solely focusing on the wealth aspect. So, money is simply just a tool that will help you achieve some of those goals. And so if you’re concerned that maybe you have made some of these errors that we have talked about throughout today’s discussion, if you’ve made those or you’re fearful that you might be making some of those questionable decisions during your retirement years, we encourage you to give us a call here at Centennial Wealth Advisory. We’ll be happy to sit down, have a discussion and help you plan to retire well.