In your efforts to build a stronger financial future, there are a number of paths you can take that might seem like a good idea at the time but which can have significant negative consequences for you and our money.
Let’s take a look at some of the most common ones, so you can avoid them, so you can focus on building a better financial future with fewer setbacks along the way.
Getting into significant debt
It’s an obvious point, but if you get into a lot of debt on credit cards and loans, then it will make it much harder for you to secure your financial future. All of your spare cash will be used to clear debts and pay interest and you will not be able to invest nearly as much in stocks, shares, real estate and your retirement fund. Keep debts to a minimum and avoid using credit at all where possible.
Not taking professional financial advice
Whether you are looking to invest in an IRA or buy your first stocks and shares, you should always get professional financial advice first. Financial advisors and capital management companies like M&R Capital Management, know what they are doing and they can help you maximize your returns and lower your risk levels no matter what stage of life you are in or what you want to invest in. To go it alone would be an wise move unless you really know what you are doing.
Buying a house with 401(k) funds
This is one of those things that a lot of people think is a smart choice because being on the property ladder brings more security. However, using your 401(k) to help you buy a house of probably not the best idea. Why? Because you will need to pay a significant amount of tax if you draw that money down, which means that it will be less valuable to you than if you wait until retirement to use it, and because it could weaken your future financial position significantly and no one wants to be broke when they are at retirement age.
Making fad investments
If you invest in the latest thing, whether it be an NFT, Bitcoin or Beanie babies, just because it is fashionable to do so, without really doing your research, there is a very high chance that you will live to regret it. It is far better to invest in known commodities such as gold, company shares and real estate than it is to take a chance with the next big thing before it has been proven.
Not having an emergency fund
You might think that any money you have left over is fun money you can spend on whatever you like, or you might think it is best to invest it all in stocks and shares, but this could be a mistake. If you don’t have an emergency fund, you should definitely build one as it will help cover unexpected expenses like car repairs, so you don’t need to rely on credit and get into debt.
If you can avoid making as many of these bad decisions as possible, you will stand the best possible chance of building your wealth and securing your financial future. Good luck.