Four Mistakes

The Four Mistakes That Can Prevent Investment Success

Successful investing requires making consistently sound choices. It also requires avoiding these four mistakes that can hurt any investment program:

Mistake 1: Waiting To Start Building Toward A Major Goal

Most people have two major goals that they want their investments to accomplish. They need to pay for their children's college education and to provide a comfortable income for their retirement. But, frequently, they invest for just one goal at a time, and that is a major mistake.
The reason is simple. If you wait to save for your retirement until after you have taken care of your children's education, you'll be effectively out of time. It's almost impossible to build a large fund for your retirement in the limited number of years that usually remain between your last child's graduation and your retirement. Instead, you need to work toward both goals simultaneously. And -- like any long-range activity -- the sooner you begin the better.

Experts advise that it's smart to start saving for your child's college on the day when you say thanks to your obstetrician. For retirement, the ideal time to begin is whenever you start your first full-time job. If you follow the experts' advice, you will build toward both your goals at the same time over many years. You can start with smaller amounts every payday and increase them as your earnings rise. Your result in the end will be much better than if you try to make up for the time you've lost with larger retirement savings over just a few years.

Mistake 2: Investing Conservatively For Long-term Goals

The many-year time frames of your investment goals are long enough to allow your investments to recover from the periodic declines that inevitably affect investment markets. Many investors decide that conservative investments are the way to counter the possibility of market declines. That is also a major mistake. Invariably, low investment risk means low returns that barely keep pace with inflation. With essentially no gains from investment growth, your progress is limited to just the amounts you put into your account. That's almost like using a shoe box to save for your education and retirement needs. Instead of choosing only conservative investments, you should consider how much risk you can take with your investments and then choose a mix of investments that offer the highest potential return for the amount of risk you are comfortable with.

Mistake 3: Becoming Too Conservative After Retirement

You are likely to live many years after you retire. IRS life expectancy charts add about 20 years to your retirement party age, but many individual investors choose to ignore this fact. When they retire, they shift all their assets into cash equivalent investments, such as certificates of deposit and money market accounts. That's the wrong answer for anyone who stops working. It's a mistake, because conservative investments are not likely to grow as much as you need them to. Inflation, combined with drawing on your investment principal, may erode your standard of living at the time when you should be enjoying it most. It's much better to preserve an investment mix with growth potential and gradually shift parts of your assets into more conservative investments as you are close to drawing on them.

Mistake 4: Believing Everything You Read

That includes this article. The all-knowing publication or book on investments simply doesn't exist. The general information you read here is good advice, yes, but it is necessarily from a general perspective. Every individual's investment situation, needs, and goals are different. What is good for one person may not be good for another. Your investments should be individually considered as part of your total financial and family situation. That also describes how we assist our investment clients. We consult with each one individually, and we fit our recommendations to their specific needs. If you want to know more about how we can help with your investments, please call us.

Emily S Hazlett is Vice President:Investments at ENB Associates,Inc. a wholly owned subsidiary of Evans National Bank. Securities offered through O'Keefe Shaw & Co. Member NASD & SIPC.

ENB Associates Inc. is a wholly owned subsidiary of Evans National Bank. Securities are offered by O'Keefe Shaw & Co., Inc. Member NASD, and SIPC. Products purchased through O'Keefe Shaw may lose value, are not deposits with obligations of, or guaranteed by Evans National Bank or affiliates and are not insured by the FDIC.