Posted by Nancy Hecht, CFP®, AIF®
IRA’s have been around for a long time and are widely used for retirement savings. Here are three common snafus that a lot of people make:
1. Having too many accounts. I had a client that established a completely new IRA each year he made him contribution. When we met and he asked me to take over management of his massive number of IRA accounts, they had numbered 20. I transferred all of the small IRA’s into IRA’s have been around for a long time and are widely used for retirement savings. Here are three once manageable account.
2. Using the wrong investment mix. Recently, I have been meeting a number of 20 somethings that want to start investing; they are a bit gun-shy and are very concerned about preserving principal. They are at the age where a portfolio that is weighted more towards equities vs. income is prefect. The greatest asset they have is time. Generally, with a long time horizon to invest, equities prevail.
3. Waiting too late to start your IRA. I am not referencing age; I am referencing the calendar year. If you make your deposits to your IRA in the beginning of the year, you take advantage of the great assets I just mentioned – time. Make your contributions in January vs. April, over the years the extra 3 months of tax-deferred compounding will make a difference to your retirement.