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I could probably post this warning every day of my life and I would STILL be finding people making this #1 most common mistake among investors. In fact, just a few days ago I sat down with my FIANCÉE to look at her investment accounts. We opened up her SEP IRA and LO AND BEHOLD there was about $13K sitting there in cash uninvested. So even MARRYING the PFC guy does not make you immune from this mistake!
So what’s the mistake? When you open up an investment account, it’s like opening a savings or checking account. But investment accounts differ in a very important way: They don’t just hold cash, they can hold any type of investment. So if I open a Roth IRA (which is a type of investment account that offers a tax break) then I deposit cash, I AM NOT DONE. Putting cash in a Roth IRA (or any investment account) is missing the crucial point of the investment account: The investing!
So here’s what you do:
1. Put cash into your Roth IRA
2. INVEST all the cash sitting in your Roth IRA. You generally do this by hitting a button that says something like “Trade” and choosing an investment, like an index fund.
Missing step #2 above is the MOST common and most damaging mistake I see in investing!
It’s a good idea to pop into your investment accounts every few months or so to make sure you’re not piling up uninvested cash. That cash can get there either from new deposits, or from dividends paid out from the other investments inside. You can avoid the dividend cash piling up by turning on the “reinvest dividends” option with is a button somewhere within the settings of your account.
If you want help with this, I’ve got free videos on my website or you could grab an hour with a Nectarine advisor who would be happy to take an expert look at your accounts to ensure you’re not making this mistake (or others).
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Jeremy
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By: Gabriela Gonzalez
Title: #1 most common mistake among investors
Sourced From: www.personalfinanceclub.com/1-most-common-mistake-among-investors/
Published Date: Wed, 28 Aug 2024 02:32:15 +0000
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