You mess up your own retirement investing
While it seems that the economy, interest rates or the stock market has much to do with your retirement financial success, your own actions may account for more of your success or lack thereof, then you care to admit. Morningstar, the well known mutual fund research firm, estimates that investors sacrifice a lot of return by buying and selling at the wrong time.
To estimate the impact of poor timing, Morningstar calculates a figure that it calls investor returns. This represents how much the average dollar in a fund actually returns. If investors buy at the peak and sell at the trough, the investor return will be low. In contrast, total returns indicate how much you would have gotten if you invested at the beginning of a period and stayed put. To appreciate the importance of investor returns, consider that CGM Mutual returned 4.1 percent annually during the decade ending in May. But individual investors, because they bought at peaks and sold at troughs, the investor return for the fund was only 2.6 percent.
So in the above example of CGM mutual, investors would have had 57% more return had they not traded and just held the fund. People trade too often and make these timing mistakes for two reasons:
1. Investors (you) get too much useless information–you listen to CNBC, read the Wall Street Journal, listen to your friends opinions and act on all of this information while it should all be ignored. Not only is ignorance bliss, it can make you money. Realize that all of this input is OPINION, not fact, and there are no “experts” in the financial arena (okay, maybe we can call warren Buffet an expert) . While these people who position themselves as experts may have years of experience or degrees from great schools, they cannot forecast the future any better then you.
2. Investors (you) react emotionally. Even if investors attended only to the facts such as unemployment data, trade flows, currency exchange rates and other hard data, they don’t have any system or model for their decisions and will buy or sell based on how they feel. Using emotions to make investment decisions will make you poor
If you would like a comfortable retirement, reduce or eliminate your exposure to financial opinions. Additionally, if you receive any factual economic information, wait 48 hours before you make any financial decision. Last, never look at the direction of the market to influence your decisions.
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Waiting 48 hours to make any decision is a great idea. If its a good investment which should probably be a long term investment then it can wait a couple days before you buy into it.
After retirement, people should have a good rest. invest for it?Maybe different people have different opinions.
Investors do tend to act emotionally when making tough investment decisions. It’s a natural behavior in every aspect of life, and unfortunately they are carried over to investment decisions. I think this is a good eye-opener for investors esp for novice investors.
There should be some backup income affter the retirement, what i feel is like we can do some cosultancy or a work through which we can recommen people and earn some good amount, After long serch i got a good affiliate program which pay you on you sales,for more details check out the webistes.
A better approach for a safe investment strategy for retirement is to first determine how much income you want to draw each year, taking into account all your living expenses including holidays and asset purchases.
Those dang emotions always screwing things up. It seems we’re optimisic when the bottoms about to fall out, and we think the sun will never shine again in a trough.
I also read elsewhere that women have a higher average rate of return than men. Would have thought it was the other way around…oh well.
Making an investment should not be decided over night. You should weigh every thing and think of the possible consequences in making that investment.
Actually, we don’t have to wait for our retirement before making an investment. It would be better to do it earlier so that things will be more stable when we retire.
I agree with the way of invest for retirement. It’s a great idea. Maybe everyone has a different opinion for the best sector of investment, but i agree with the idea not to look at the direction of the market to influence the decision.
To estimate the impact of poor timing, Morningstar calculates a figure that it calls investor returns. This represents how much the average dollar in a fund actually returns.
What’s the main point why you are working? It’s for you and your family to have a better life in the future. That’s the most simple reason why you need to have an investment as you are near to your retirement age.
The best way of doing retirement investment is to diversify it. A mix of investment assets such as Real estate, Gold Deposit, mutual funds, stock market etc.
Immediate loans
Investing is something that could make or break your future if not wisely planned. Of course, we want to have a secured and comfortable future during our retirement days. We can find numerous investment firms in the market but the fear is always there that we might invested in the wrong company. I suggest that we must first conduct a comprehensive research to find the reliable and where we can have a secured future. It’s not just about money matters but it is our future and years of hard works that are at stake, so we must be very careful. Anyway, I really appreciate your post. Thanks for sharing this out.
After retirement ,they need more support of money.Invest for Retirement is the Right Way to solve this problem.
If markets are efficient, which generally they are, all information available to the market should be reflected in the price. This is the basis of the efficient market hypothesis. Friends with hot tips should not considered a reliable source of investment advice as any personal view’s they hold will probably already have been priced in.
Investment it the best thing what one can do… because one cannot say how much money he will need to run his house. After retirement there is no income of source. This by doing the investment people can secure their future when there is no income source.
When people retire do they really want all the stresses of investing themselves? I guess it depends on how much you have set aside in there pensions
Discipline is probably the most important trait of successful investing. Most people when doing well in a position get greedy and stay too long. most performing poorly stay too long. You can read and try to decipher all the fundamentals and even get it right and still lose. As technology changes faster and faster long term investing will be very tricky. Companies will come and go as technology changes. Human nature will likely be the only constant.
Retirement investment stategy should be planned with some time and patient. It should be any of most importan income source during that time.
I think renting out your house is a good way yo earn some money for retirement. You can use sites like MetroFlats.com. I’ve done it a few times, you’d be surprised how much money you can make.
I think that the best way for investing in retirement is opening a fixed bank accountm where the order is that 20% of your salary while still in service is cut off each month and added to your fixed bank account which you can withraw till 1 year after you retire.
The bank or you will make a request and the cash is released to you main account and with this, you can start big business and even start living big instead of living so wretched as a retired worker.
Hope this helps some people….
I do invest in wine ! it is a good way to spend the money and to be able to drink it later 😉
For example, what about a good Meursault
wine to wait for the retirement ?
When Invest for Retirement it is better to invest on solid sectors because this type of investments have long term goals.But if make enough for your life time this type of investment is a waist of time
Great resource. I just feel it requires a lot more to invest in to get a very good amount during retirement. In this case the life which we live in present has to be compromised big time. Just don’t like that.
Agree, that kind of investment will really help after retirement.
Sean
It seems like common sense to buy low and sell high. I agree, we should ignore the media, beucase they could cause us to lose money by selling quickly in panic.
I’m at the age now where I have no choice but to draw retirement income whether I need it or not. The IRS says that if I don’t withdraw a certain amount, I pay a 50% penalty on that amount. With the stock market as volatile as it is, and the uncertainty in the future, it is not a good thing.
I loved this post and for your information I am 24 years old and I have started my retirement financial planning before a couple of years. My first investment for my retirement years is my PF and VPF contributions. In India these will get an interest of 8.5% compounded annually. When we consider a time frame of about 36 years… my monthly investment of Rs 3000 ($67) will come to around Rs 7,71,28,844 ($ 1,713,974) before I retire!
So my advice to everyone is start your investment plans as early as possible.
I have invested in mutual funds a few times in my life, and I always seem to invest right at the peak, I swore the last time I would not do this again, but I have.
Next time I will wait for the inevitable stock market crash before I put my money into funds, or I will diversify into things such as Gold that usually go up when the stock market crashes, so there is always something that I can spend in time of need.
Nice Article.
Very useful and informative blog post concerning Invest for Retirement- The Right Way. I have bookmarked your blog for future posts.
Your post was very informative and I really enjoyed it. I hope
you don’t mind me sharing a quote from my related blog post that
I just put up this week…
It’s really sad to see those that must return to work in those years where they should be watching their grandchildren playing rather than going into work day after day. If you don’t want this for yourself, then action needs to be taken. You cannot depend on social security for your retirement and chances are that social services will be a long forgotten thing of the past by the time we reach retirement age. There are several things you can do that will help you when it comes to setting aside and investing money for your retirement.
I learned so much from reading this blog. I am in my early 20’s and I just started saving for my retirement. I know there are lots of different views,etc on saving for retirement,but the information and tips you have provided are excellent!:)
Investing in any kind of market is risky, thats the nature of the business..
If you planning for retirement I would avoid mutual funds and banks own funds where they charge you a small account fee, because they make money whether they make profit or not and usually your money is tied up. If you want to take it out early there are usually heavy fees associated with it. Do thorough research and do not believe the statistics given to you.
I also started up a site talking about forex, although its new I am looking to cut through the crap and tell people what works and what doesnt.
This is a must read post. Many people especially the “old” ones messes up their retirement by investing the wrong way. This article will help those who are planning to retire already and even those who have not yet planned their retirement.
I started my retirement plan when I was 30, I had some mutual funds but since a few years ago I invested into Business, I still have a way to go yet, I do mostly investments now, this was a great article and blog.
Retirement Investment is a good one..but please you choose the one that allow your contributions to grow tax-deferred until retirement.
investing in your retirement income is one of the best decision you can make. If you whant to have a retirement with no problems this is something you have to do
I have strated my 401K retirement plan when I got my first real job at 24. I was thinking about adding another retirement plan, but havn’t decided yet on what type. The tip on waiting 48 hrs before pulling the trigger is a great suggestion. I have seen many people make bad decisions in the spur of the moment.