We all have different approaches to money, understandably so. A lot of it has to do with who your parents are and how you are raised.
Depression-era folks are famously frugal. Their kids less so. Some people are planners in every aspect of their lives, and some throw caution to the wind.
When it comes to retirement investing, the path to peace with money can become quite convoluted. Our money personalities often are not clear even to us, and then we add to that complex personal relationships.
Your spouse, your kids, your parents, your neighbors. Everybody has an idea of what you should do with the money you earn, and while advice can be helpful, it also can be distracting.
What kind of retirement investor are you? Take a look at the four types below and see if your personality matches one or another, or perhaps a mixture of several.
You do your own taxes. You absolutely love to buy a new car, just for the chance to negotiate. You pay attention to fees and costs for everything and look for the best deals every chance you get. You also sometimes lose sight of the forest for the trees.
Action to consider: You’d probably do well as a do-it-yourself retirement investor, but first read some good retirement planning books. What you’ll find that is a low-cost portfolio approach is more effective than picking stocks, for a variety of reasons.
You attend your company 401(k) meeting and fill out the forms, but then fail to choose an investment fund. Instead, your contributions pile up as cash. You set aside a percentage of your pay into an IRA but have no idea how much is enough to achieve your goals. The stress of not knowing is hard to face.
Action to consider: Hire an hourly financial planner who is a CFP or get some help from a trusted family friend who knows what to do. A little bit more knowledge will help you bridge the “fear gap” slowing your progress toward comfort with investing.
Retirement planning is for old people. You’ll get around to it when you turn 30 or maybe 40. Besides, you like your job and can’t imagine not working. Maybe you won’t even make it 65, who knows?
Action to consider: You’ll make it to 65, maybe even 85 or older. Every month you don’t save when you are young means you’ll have to save even more when you are older. Time is a huge investment advantage. Don’t squander it.
Isn’t my spouse taking care of this? Won’t my parents leave me money? I guess my kids will take care of me when I need them, right?
Action to consider: Put the shoe on the other foot. Do your parents believe that you will take of them? Do you want your kids to worry you won’t have enough to get by in your golden years? What will they give up of their own retirement if they have to?
Found your investment profile in these four? If so, take these action steps seriously and find a way to correct your behavior while you can. Your future financial self will thank you.