IRA Investment Gone Wrong? Here Are Some Mistakes You Might Be Making
When it comes to retirement, everyone wants to walk down a path of safe savings and mistake-free investments. As such, many people turn to IRAs, or Individual Retirement Accounts, since they make for a reliable and high-return option (an IRA is a retirement plan created by the U.S. government to help workers save for retirement).
But the truth is that an IRA, or any investment avenue for that matter, is only beneficial if you use it in the correct way. With different people extending different advice about IRAs, it’s easy to get confused and make mistakes that are usually avoidable.
So today, allow us to give you a peek into the most common IRA mistakes which you should avoid to ensure that this investment yields maximum benefits.
#1 – Shying away from risk
There’s an unsaid stigma attached to taking risks. People often think they’re equivalent to inviting failure or loss. However, that’s not true! Financial advisors suggest that young IRA investors should take risks. Avoid touching your IRA account for 20 to 30 years and you’ll be able to withstand fluctuations in the market. You can choose to diversify your investments in the meantime or limit them to only stocks as per your choice. But try to participate in riskier projects because if your investment turns out to be successful, you could make a fortune.
#2 – Stopping to fund your IRA
An IRA isn’t as exciting as a taxable brokerage account, which is why people often lose interest in it and avoid funding it. Little do they realize that they’re making the biggest mistake of their life! By not funding IRAs completely, people miss out on tax advantages and tax-free compounding of money.
#3 – Making small contributions
It’s been said for ages that you should be making regular contributions to your investment account to make profits. However, experts believe that when you have access to cash, investing it all at once is better than making regular contributions. John Pilkington, a senior financial advisor, says that dollar-cost-averaging (small consistent investments) lowers the stress which comes with the stock market’s volatility, but it also decreases the returns.
#4 – Using more than one IRA
There’s no hard and fast rule that one can’t possess multiple retirement accounts, but you’ve got to make sure that your annual contributions don’t exceed the limit of your investments. James DesRocher, a financial advisor with Park Avenue Securities in Middleton, suggests that using multiple IRAs is a bad idea. He says that more IRAs create pressure on the investor and diminish the positive effect of rebalancing.
Wrapping it up
Choosing a good retirement plan can be difficult, and you might make silly mistakes on that path. But remember that the biggest mistake would be not learning from your previous blunders, so stay positive and explore as much money saving options as you can.
More in Investments
Pandemic Scams Are At An All-Time High – Learn How to Stay Safe
If you thought the pandemic would make the scammers take a break from their shenanigans, you were wrong. Instead, fraudulent activity...July 27, 2021
Average Retirement Savings Across States: Highest to Lowest
The place where you live undoubtedly has a significant impact on how much money you can save for your retirement. While...July 22, 2021
Money Doesn’t Make You Rich, Your Core Values Do
You must have heard this old yet classic expression – money can’t buy everything. But even after knowing about it, a...July 20, 2021
Want to Live Like Rihanna For a Day? Her Coldwater Canyon Mansion Is Yours For The Taking
Bad Gal Riri is easily everyone’s favorite, hands down. Ever since the American record producer Evan Rogers discovered her, we just...July 16, 2021
4 Tips & Tricks to Make The Most Out of Tax Deductions
We know it, we understand it, but we don’t want to accept it. That one-liner perfectly defines the condition of every...July 15, 2021
Golden Rules of Financial Planning For Beginners
A dime saved is a cent gained. A penny saved is a penny earned. Bet you’ve all heard those lines a...July 10, 2021
Here’s Some TikTok Financial Advice You Should Take With a Grain Of Salt, Advises CFP
Who knew that a social media app catering to the whims of millennials, Gen Z-ers, and sometimes boomers would transform into...July 6, 2021
Saving Money Made Easy With Five Simple Tips
A wise man once said, it’s not your salary that makes you rich; it’s your spending habits. TBH, we couldn’t agree...July 4, 2021
Tips To Maximize Returns On Your Mutual Fund Investments
When it comes to investments, most of us prefer sticking to the traditional options – stocks, shares, gold, and property. But...June 29, 2021