We’ve talked about commonly made money mistakes before. We covered things like not making long-term medical plans, underestimating expenses, or even falling victim to fraud.
But these aren’t the only financial mistakes we’ve seen many seniors make. And even the most brilliant individuals can also make careless mistakes when it comes to money management.
Making Risky Investments
Sometimes when the market looks enticing, we tend to take on more risk than we should. Unfortunately, when things go south, this can be detrimental – both financially and to our mental health.
Truth is, we suffer significantly more pain when we lose money than compared to the pleasure we get earning it.
While we may be in a bull market now, there’s no telling when it could take a turn.
Purchasing Complex Financial Products
When it comes to saving and investing, there’s really an overwhelming number of options. From stocks and bonds to annuities, real estate investment trusts, hedge funds, and more, the opportunities are plentiful.
However, some alternative investment opportunities are also incredibly complex. And, typically, the more so it is, the worse the investment is.
Make sure you fully understand what you’re buying before investing – or just stick to more simple options. If you can’t explain it in depth to your grandkids, you might want to skip it.
Valuing Money Over Time
Sure, money is important, but often times we tend to overvalue that importance. Time, on the other hand, is a far more finite resource.
You don’t have to be the textbook definition of wealthy to feel rich, much less happy. Instead, try to measure your financial wealth in terms of years.
The less money you need to live comfortably, the happier – and essentially the richer – you’ll actually be.
You could have a net worth of ten million dollars, but how you spend it determines if you’re actually rich. If you spend $2 million a year, that’s only 5 years of financial independence.
However, you could have a net worth of $250,000 and live comfortably on just social security plus an additional $10,000 a year. In that scenario, you’ll have 25 years of financial independence.