Periodically we all need a refresher course or reminder of spending, saving, and investment strategies that are bad for our retirement plan. It can help to stare such a reminder in the face and then say “whoa, that’s me doing that.” In the past, I’ve been reminded in this way of a need to re-balance and/or reallocate our portfolio to improve its longevity characteristics.
< A recent slide show article from Forbes is very helpful in presenting 20 different actions (or inactions) that can cause us to lose our retirement nest egg.
First on the list of inactions is a failure to diversify. I can’t argue with this ranking at all. On days when the market is lurching south, it is calming to see at least one or two our nest egg assets actually going north. Diversity does that – finding and holding assets that are not correlated.
Number 3 on the list is ignoring inflation. I buy that as well, which is why we own so much of Vanguard’s VIPSX (up 7.84% this year compared to a flat DJIA) and continue to buy a commodities.
Number 12 on the list is “overestimating your investment acumen.” That could be me. If I visited ten different financial planners, at least half would likely have advice for me that would substantially change our investing plan. My response would be this: Show me how your plan would be improve expectations for achieving our retirement income goal. I have solid predictive data supporting our plan. Your data must be better.
The “be careful riding winners” reminder on the list is also something for me to be cognizant of. Some day (although not too soon), VIPSX will become a lousy asset and I have to be ready to sell it and take our gains. More to this point is gold. This has always been my problem with owning gold: When do you sell it and replace it with a different investment? I don’t like hoping for more bad world economic news so that gold prices will increase.
Anyway, take a quick look through the Forbes list. It may spur you to do something that will actually improve the quality of your retirement nest egg.