Video Transcript

Hi, I’m Joseph Falbo, President and Financial Advisor for Falbo Wealth Management, and I’m here to explain common investment mistakes that retirees make and how to avoid them.

Taking a short term view rather than focusing on the long term. When your financial advisor develops a plan for you, he or she has normally considered the risks that can be inherited in the market. It is virtually impossible to predict where markets go, and it is often investor behavior to try and outguess the market in the short term. Your investment plan has been tied to your changing needs over time rather to where the markets are. If it isn’t, then you should consider whether you are in the proper investment plan. If you change your strategies to focus on short term market moves, you could potentially undo the overall plan.

Confusing saving with investing. These two are not the same. When you are a saver, you are not prepared to take on the risks that are normally associated with market investing. The trade-off, of course, is that your rate of return will not normally be enough to let you stay ahead of inflation. Investors seek higher returns and are prepared to take on some risks in order to generate higher returns. For most people, it is important to keep money growing and to maximize its ability to work without exposing too much risk to their nest egg.

Trying to do it yourself. It may sound attractive to spend all day at your computer trying to figure out where markets are going and which stocks you should buy. However, remember that if you’re managing your entire retirement nest egg in this matter, you are at a considerable disadvantage. Professional managers have access to the latest information and still find it difficult to consistently outperform markets. This is not to say that you may not have success in the short run. However, individual investors make short term decisions based on limited or poor information or emotion and lose valuable pieces of their retirement nest egg.

Not paying attention to transaction costs or fees. While there are some low-cost trading companies or online providers that you can work with, there may still be fees associated with your investments that will harm your overall return. Many mutual funds charge high fees that have to be paid whether the fund is up or down. Some segregated funds will charge large fees for the insurance component of the investment. Again, this will affect the overall performance of your investments.

Sign up today for a free PDF copy of my workbook, Your Second Life. This booklet co-authored by Barry LaValley of the Retirement Lifestyle Center will help you understand the benefits of planning ahead to build a life that you want.