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By Michael Wiseman
O
nly 14 percent of American work-
ers say they are “very confident”
they will have enough money to
live comfortably throughout retirement.
To help reduce such uncertainty from
your life, consider these five common
investment pitfalls -- and how to avoid
them.
˛
MISTAKE 1: Waiting to maximize
your contributions
The sooner you start contributing the
maximum amount allowed by your em-
ployer-sponsored retirement plan, the
better your chances for building a sig-
nificant savings cushion. By starting
early, you allow more time for your con-
tributions – and potential earnings -- to
compound, or build upon themselves,
on a tax-deferred basis.
For 2013, the maximum you can con-
tribute to your 401(k), 403(b), or 457
plan is $17,500. If you are age 50 or old-
er, you can sock away an additional
$5,500. If you can’t contribute to the
max, be sure to contribute enough to
take full advantage of any company
match contributions.
˛
MISTAKE 2: Ignoring specific fi-
nancial goals
It is difficult to create an effective in-
vestment plan without first targeting a
specific dollar amount and recognizing
how much time you have to pursue that
goal. To enjoy the same quality of life in
retirement that you have become accus-
tomed to during your prime earning
years, you may need the equivalent of
up to 80 percent of your final working
year’s salary for each year of retire-
ment.
˛
MISTAKE 3: Fearing stock volatil-
ity
It is true that stock investments face
a greater risk of short-term price swings
than fixed-income investments. Howev-
er, stocks have historically produced
stronger earnings over the long term.
In general, the longer your investment
time horizon, the more you might want
to rely on stock funds.
˛
MISTAKE 4: Timing the market
Some investors try to base invest-
ment decisions on daily price swings.
But unless you have a crystal ball, “tim-
ing the market” could be very risky. A
better idea might be to buy and hold in-
vestments for several years.
˛
MISTAKE 5: Failing to diversify
Investing in just one fund or asset
class could subject your investment
portfolio to unnecessary risk. Spreading
your money over a well-chosen mix of
investments may help reduce the poten-
tial for loss during periods of market
volatility. Diversification may offset loss-
es in any one investment or asset cate-
gory by taking advantage of possible
gains elsewhere.
Now that you are aware of these five
common investment errors, consider
yourself lucky: You are ready to benefit
from other people’s experiences -- with-
out making the same mistakes. í
8
LIFE
&
TIMES
September 2013
Michael Wiseman
is an own-
er/partner in Olde Hickory Finan-
cial Services LLC, Hermitage. He
is also a registered representa-
tive of and offers securities
through WRP Investments Inc. of
Youngstown. He can be reached
at 724-981-2112 or michaelwise
man@oldehickoryfinancial.com
YOUR
MONEY
When the finish is near
5 common retirement-planning mistakes investors make
John Zavinski/Life & Times