You’re 48 years old, your children are finishing college and getting ready to move out, you are whittling down your mortgage balance and your career is starting to kick in. Everything looks good except one thing; you make the big ooops.
You are in your final working years but you have spent absolutely zero time investing for your retirement. Maybe you have invested a little bit into your retirement plan but it’s really not going to be enough, now what??
Contrary to what you may think, you have not made any “permanent” financial blunders yet, because at 48 you still have at least twenty working years left to rebound.
Minimize Future Financial Blunders
10 Tips To Financial Rebound
It’s never too late to rebound from a financial oops. You can still make up for lost investment time.
Tip #1 – Keep Investing.
The worst financial move you could make now is to throw in the towel and stop investing. If you do that, you will not have any money waiting for you when you reach retirement age.
Tip #2 – Develop Your Retirement Income Target.
When you retire, taxes and inflation will erode your spending power; make sure the retirement calculator you work with takes that into consideration.
Make sure you figure into your calculations the cost of health insurance, home maintenance, auto and home insurance plus and hobbies you plan on engaging in at retirement.
Tip #3 – Invest In What You Know.
A big financial mistake many investors make when they want to make up for lost time is to invest in risky, unknown investments.
You lost time, move on, let it go, but don’t jump into investments that you do not know. Before investing in something new or unknown do your research and become familiar with it. It’s okay if you do not understand options, just don’t invest in options.
Tip #4 – Diversify|Spread The Risk
Do not put all of your eggs in one basket. You may have heard that phrase numerous times, but never thought too much of it. When it comes to investing, that concept is serious.
If you have all of your retirement investments in bonds and the bond market drops, so will your retirement money. But if you have some investment money in bonds, stocks and cash when the bond market drops, you will lessen your loss.
Spread your investment risk around by putting some money in foreign, large cap, mid cap, small cap, bond, balanced mutual funds and then money market. If you find it confusing to keep up with all of those choices, you can invest in a “lifestyle” fund. This type of fund makes the allocations for you.
Tip #5 – Avoid Hottie’s
Avoid buying on hot stock or financial tips and trends; these will get you into trouble every time. By the time a hot financial tip reaches you, it has already turned cold; or worse yet, it was never a good tip, just someone’s opinion.
Instead of investing on hot financial tips, invest in what you know.
Tip #6 – Avoid Falling In Love
Do not fall in love with your investments. If the investment is not producing the returns that you anticipated and it’s time to get out, do it, sell it and take your losses.
Tip #7 – Don’t Ignore Them
Pay attention to your investments; don’t ignore them. It is your hard earned money that you have sitting in your retirement investments. You need to monitor those investments and help them to grow.
Tip #8 – Your Silver Bullet
Compounding interest would have been your silver bullet, it you had started your retirement investing in your 20’s.
If you start investing in your 40’s, compounding will not give you the impact it would have had in your 20’s but that’s okay. You still have 20 years or so left to accumulate enough money to be able to afford retirement on your terms.
Compounding interest is where your money earns interest on the interest on the interest.
Tip #9 – Max It
Maxing out your retirement plans at any age is considered by some financial planners as the cheapest way to invest for retirement.
Think about it, your contributions are tax deferred (unless you invest in a Roth IRA). When you have a tax deferred investment, all of the money you invest is working because you are not taxed on it until you retire.
Plus, if your retirement plan at work includes employer matching, you are getting free money, the more you invest the more free money (up to the limit)…how can you beat that.
Tip #10 – Just Do It
You work hard for your money, you need to take care of that money so that someday when you reach retirement age, that money will let you do whatever you want.
Nobody cares as much about your retirement as you do. If you are not investing for it, who else will (hot tip: no one).