10 Mistakes That Deplete Your Wealth
10 Mistakes That Deplete Your Wealth
Cynthia Measom Fri, February 18, 2022
Proper planning is crucial when it comes to your finances -- not only for the decisions that can affect your wealth now but also for those that will influence your bottom line long term. But knowing how to make the best financial decisions isn't innate. And if you don't fully understand how to manage your finances, you're likely to make mistakes that can take your net worth from well-cushioned to barely getting by -- or force yourself to stay stuck in a constant financial struggle.
The good news is that the longer you have until your target retirement date, the easier it will be to recover from financial blunders, but what if you could avoid money pitfalls altogether? Take a look at these 10 mistakes that deplete your wealth so you can sidestep them and achieve personal financial freedom.
Proper planning is crucial when it comes to your finances -- not only for the decisions that can affect your wealth now but also for those that will influence your bottom line long term. But knowing how to make the best financial decisions isn't innate. And if you don't fully understand how to manage your finances, you're likely to make mistakes that can take your net worth from well-cushioned to barely getting by -- or force yourself to stay stuck in a constant financial struggle.
The good news is that the longer you have until your target retirement date, the easier it will be to recover from financial blunders, but what if you could avoid money pitfalls altogether? Take a look at these 10 mistakes that deplete your wealth so you can sidestep them and achieve personal financial freedom.
Investing Blindly
Brian Stivers, investment advisor and founder of Stivers Financial Services, said that one of the biggest mistakes that depletes wealth is investing in areas you have no experience in or don't truly understand.
"The media and internet are filled with fringe investments that promise great wealth with little risk," he said. "Yet, many of these are extremely aggressive and have a substantial downside. It is important for those who are accumulating wealth or have already accumulated wealth to make sure they fully understand the risk involved in any new investment and how that investment works. For most investors, it makes more sense to stay with traditional investment strategies that are easy to understand and have a long track record of success."
Making Investments Based on Emotion
"Investing is emotional given the fact that money is at stake, but investors must control those emotions and aim to act on reason and rationality," said Jason Dall'Acqua, CFP(r) and president of Crest Wealth Advisors.
"Unfortunately, people tend to make investment decisions that are against their own best interests strictly for emotional reasons. The most common example is chasing trends, which results in buying high or being panic-stricken during a market decline, which results in selling low. These decisions can have a significant negative impact on long-term investment returns."
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