My observations over the years have been that the majority of people don't really have a plan or strategy for their investments. There are many reasons for this, but I think the main underlying cause is lack of time. The job takes up a lot of the time for an American compared to some other parts of the western world. Family obligations are probably the next hurdle that interferes with people's ability to spend more time looking after that important nest egg that needs attention.
Along with work and family issues, other reasons for not having a solid financial plan are not being able to afford a financial planner, or perhaps not finding a trustworthy candidate. For others, a lack of knowledge or interest in what it takes to build an investment portfolio that can provide a positive return, or for some, just a pure procrastination and postponement for the future.
The consequences of this inattention to financial planning are that most of these people will either be well below what will be necessary for a comfortable retirement or they will wait until it is too late to be able to make up for the sums needed for those golden years. . . A look at the average savings statistics for a 40-year-old proves it. Leaving money in a 404k account with a former employer, for example because you really don't know what to do with it, or putting money in a savings account paying next to nothing in interest is not a good investment strategy.
This tragedy must not happen. Building a well-diversified portfolio of funds that only require annual rebalancing can be accomplished by just about anyone, even a newbie to stock investing. If a person is willing to devote only a few hours of work to this investment strategy, they will have an excellent chance of achieving a goal of growing a retirement nest egg that they can be proud of.
Just the words, stock market investing scares some people mainly due to a lack of knowledge about how the markets work or because of previous bad experience. The truth is, investing in the stock market is the best way to get the kinds of returns needed to grow investments that will reach the asset levels required for retirement in the future.
Following a few basic investment rules, such as proper diversification and asset allocation, can keep the risk levels for investing in the stock market at a very high level. tolerable. This same portfolio plan allows your investments to grow with very little attention or need for changes. It will also prevent people who start their investments late from swinging for fences on a wild plane trying to make up for lost time. This scenario will most likely end with a tragic end.
Everyone needs a plan regardless of the weather they live in. Keeping it simple can sometimes be the best choice. Whatever your situation, find time to make a plan so that on the day of retirement you know your financial security is being taken care of.