The Psychology Of Retirement Planning
Retirement Planning Fears, What Fears?
If you think you are the only individual with retirement planning fears, think again. Investing for retirement is an unnerving task for many people.
Having the investment fear of losing your money, making an error or losing control of your financial affairs is not the problem. The problem is not knowing how to conquer those investment fears.
Some investors may feel safe following the crowd and place their money in whatever investment is trendy. Hot tip: That’s not always your best financial move. Who says the crowd knows more about investing than you do? What if the crowd is wrong?
When financial fears do arise, you need to know how to combat those fears; otherwise, you may make your financial affairs worse.
Entering Your Combat Zone
Seven Tips To Conquer Retirement Investment Fears
- Invest for the long-term; avoid the urge to get a short-term up tick in your investments. When your retirement plan statement shows positive returns you naturally feel good. Avoid using your investments to get that feel good emotion.
- Save your emotions for sad movies. Emotional investors tend to panic when markets hit a negative cycle. They sell too early, before the stock or mutual fund has rebounded; or buy too late, when the stock/mutual fund has already reached its peak.
- Diversify, diversify, diversify. Avoid putting all of your investment money into the same type of investment. A well diversified retirement plan would include investments that range from large cap to small cap mutual funds, bond funds and a cash equivalent such as a money market.
- Dollar cost average. The random ups and downs of the market will not bother you as much because you will buy regardless of price; therefore, you will buy more shares when the price is low and less shares when the price is high.
- Never stop investing. Continue to invest even when the market seems to be in a perpetual slump. No one cares about your retirement planning as much as you do; if you are not socking money away for your retirement, who will be?
- Be aware. If you did buy an investment when the price was on the high side, the value has dropped significantly and that value continues to stay depressed, do not afraid to take a loss and sell it. It’s okay to procrastinate for a little while, just do not procrastinate too long.
- Reach out. If you need investment advice, get it. You may not be a whiz at investing, and that’s okay. You are better off asking for help than remaining in the dark and getting nowhere.
When the market is in a constant state of turmoil, it’s hard not to have some type of investment fear. All investors fear market gyrations; but successful retirement plan investors learn how to work around their fears, you can do the same.