Your Investments: Three money mistakes to avoid

I’ve seen the future, I can’t afford it, Tell me the truth sir, someone just bought it, Say Mr. Whispers! Here come the click of dice, Roulette and blackjacks – gonna build us a paradise – ABC-How to be a Millionaire.

November 10, 2010 23:19
3 minute read.
Game dealers wait at tables of the casino at Marin

Marina Bay Sands casino. (photo credit: AP)

Many people who I speak with are very concerned about the future of their finances.

“Forget about retirement – it’s too far away,” they say. “How am I going to pay for my daughter’s bat mitzva next spring?” While planning your finances can be quite intimidating, don’t think the solution lies in a pair of dice, the roulette wheel or in a lottery ticket. As I have mentioned previously, 25 percent of US survey respondents said their plan for retirement was to win the lottery. I wish them lots of luck!

Below are the three common money mistakes that, if corrected, will help point you in the path of financial success.

I’m in control

Recently I met with a well-off lawyer who was here in Israel visiting his children. He requested to meet with me because he wasn’t happy with his investment adviser. He told me that his old broker had retired and the new one he was assigned to never took the time to get to know him. He told me he is very busy and used to rely on his broker to call with interesting ideas and both portfolio and market updates.

The lawyer was also disappointed with his investment returns and thought his portfolio should have performed better based on market performance during the same period. When I asked him why he hadn’t transferred his account to a different firm, he said he was very busy and didn’t have the time to get around to it.

Investors need to stop running on autopilot. They need to take control and make sure that their money is working efficiently. It doesn’t mean you have to become a do-it-yourselfer; instead, keep in touch with your adviser on a regular basis to make sure things are doing what they are supposed to be doing.

You don’t have to be rich

I can’t tell you how many people tell me that they’ve delayed investing with a professional because they think they wouldn’t meet the minimum balance. They think if they don’t have hundreds of thousands of dollars it’s pointless. A person recently told me he has about $40,000 invested at a well-known firm, but said he has no idea how his money is invested. After reviewing his portfolio we found that his investments were no longer appropriate for his current situation, and he had basically wasted four to five years of investing time.

When I asked him why he had never called me before, he said he had heard that no adviser would speak with him concerning such a small sum of money. Keep in mind that there are many types of advisers who work with many different types of clients.

We are one

The third mistake is having multiple investment accounts with different firms and not paying attention to their performance or how they are all invested.

Your financial adviser should be like your chief financial officer. When a client has various accounts around the world, his financial adviser should be sitting on top of his entire situation. The professional will not just focus on one account, like a local investment manager, but should assess everything and see how the entire financial situation fits his client’s goals and needs.

This is particularly important for investors who have accounts abroad but live in Israel. While the investor may have been able to juggle everything when he lived in close proximity to his various advisers, now that he lives in Israel, it becomes much harder for him to get his hands around coping with multiple currencies and global investments.

If you want to get your finances on more solid ground, try and avoid these common mistakes that investors make and you will be on your way to building a paradise.

Aaron Katsman is a licensed financial adviser in Israel and the United States who helps people open investment accounts in the US.

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