What NOT To Do With Your Nest Egg, Mistakes Two Through Five

Yesterday, we talked about what is perhaps the greatest mistake you can make in protecting your nest egg—the big initial splurge. Now let’s discuss four other common mistakes that can drastically erode your life savings over time.

Whitethroat Nest 07.05.10 (5 Eggs)
(Photo credit: Nottsexminer)

Cutting it too close.
When people retire, they tend to think that the income they receive now will continue at the same level for years to come. In effect, they live from month to month with no cushion in place for emergency expenditures. When a medical problem or other significant expense occurs out of the blue, investments might have to be sold immediately to cover the cost, perhaps during a downturn in the market. The key is to plan ahead to protect against emergency expenditures.

Looking for the big score.
If someone tries to sell you on an investment that seems too good to be true, it probably is. Sure, there are opportunities to make a fortune in the market or on real estate, but if the person selling you on the idea seems insistent that you “have to act now” or “this is a once in a lifetime opportunity,” it is probably best to walk away.

Going for high-yield investments that carry a lot of risk.
High-yielding investments such as junk bonds and bank-loan funds might seem like a great way to improve your income stream, but that potential carries additional risk. In a down or high-volatility market, the potential loss on such investments can cause your nest egg to evaporate in a hurry.

Getting too emotional about short-term losses.
Trying to time the market is one of the greatest mistakes people make. A bad day might make you think that you have to get out, right now! The best strategy for retirees is generally to build a portfolio capable of meeting long-term needs, while at the same time withstanding inevitable short-term declines.

We can work with you to design and implement an estate plan capable of protecting your hard-earned assets for your enjoyment today and that of your loved ones after you are gone. Contact us today to discuss your particular needs at (626) 696-3145.

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