Common Investor Mistakes Revealed

You might not think of yourself as an investor, but you are. Most of us have a checking account and probably a savings account, even if it is for just Christmas or your Emergency fund. A good portion also have 401K accounts or some other retirement account available to them via their work.

But even if you are just starting out, or have been maxing out your 401K there are five very common investor mistakes made over and over again. Retirement is a compounding game, meaning that returns magnify returns. You really can't afford to drop even 1% a year over 30 years.

If you invested $10,000, never touched it again and earned 4% interest compounded yearly (BTW avoid any investment that only compounds yearly :) ) after 30 years you would have $32,433.98, but at 4% percent it would be $43,219.42 or $10,785.45 more...more even than your original investment.

So here are Five Common Mistakes to Avoid:

1. I Have Plenty of Time to Worry about That - Actually you don't. Using those 4% numbers above; if you have that investment for 20 years instead of 30, your out nearly $17,000! Time is the friend and enemy...use it wisely
2. It is too Late - It's never to late! Once again time is ticking and every second lost is money lost. This goes for everyone: The best time to invest is now!
3. I Won't Take any Risk - While I believe we should all invest within our own tolerance level, unfortunately risk equals reward. You have to balance out the two. As shown above, every percentage is very important over time.
4. I am Captain Cowboy, Let it Ride! - OK, as I have stated before risk management is key here. You need the returns, but risk is still risk. If you want to bet on every tip out there go to Vegas, but read Viva Wall Street first.
5. All in your Company's Stock - One word that should scare the heck out of you at night; the 20th Century Frankenstein...ENRON. The company would have pep rallys, tell the the working staff how great things were going, wait for them to buy to drive up the price of the stock, then sell! I am not saying don't buy any either, take advantage of ESOPs (Stock Options) if you can, just do not peg a higher percentage then you should have of that type of investment class. If you think you need 20% Mid-Cap stocks, and your company is a Mid-Cap stock company and it is run well, etc, fine put some, 5-10% of it in the stock. It is hard to be the nay-saying when your cube mate is high-fiving the janitor, but when/if it tanks, you may be out of a job, but you won't be starting over.

Look, take whatever I say with a huge grain of salt. I am not a stock broker, but I just see people tossing away $10,000's of Dollars. Get with a retirement fund helper. Find someone you trust, then...don't trust her/him! Ask questions, lots. Read blogs (especially this one :) )Don't feel stupid. People can feel dumb all the way to the poor house!

But whatever you decide, make a plan and start working it today. The investment interest you save may be your own!

A Most Important Key to Your Financial Future...

Quick...what is one of the most important keys to your financial future that is rarely talked about? It is Your Career or Ability to Earn Money(AEM).

Yes, you have to manage your finances once you have the money, but how about having something to manage in the first place? My parents really believed if you worked hard, didn't raise a stink if things were bad, that you could work at a job for life and the company would take care of you. I hate to break it to you, but the only one that is going to take care of you...is you!

Let me give you a example; let's say you are making $50,000 per year. You work hard, get your 3% raise per year and in ten years you will be making $67,195. However, If you can just average 5%, you would be at $81,444, or $14,249 more per year! After a 20 year career you would be at $132,665 vs. $90,305 or $42,360 more!

I know what you are saying, "I am lucky at my job if they give x%." And you are right they are only giving "x". Generally to people to who don't fight for what is theirs.

This is the Power of Compounding, just like with Investing or Savings. I am constantly surprised to hear people chase .25% in a savings account, or clip a 20 cent coupon, but not fight for an extra 1-2% on a raise. 1% more over 10 years with a $50K base is $6816 more in the tenth year...for just that year alone!

How to do it:

1. Be Good at What You Do - Demanding something you haven't earned can backfire at you by labeling you a malcontent. "Your Bonus is you get to keep your job Jim." Work on this step until it is as shiny as a new penny :) otherwise you will not Pass go, You will Not collect $200.
2. Document Everything - This is called having back-up. Track your accomplishments, no one will do it for you! Caution: it has to be real numbers that shows value in spades. For my review this year I submitted a 10-page document showing in depth our accomplishments this year. Many other submitted an email or a Word Doc with 1-2 pages. Guess who's raise won't be questioned?
3. Network - Meet people in your profession or industry, get known. Join LinkedIn. Work Trade Shows and meet your peers at your competitors.
4. Knowledge -Find out what the going wage is for a similar position to yours in your area or company. Use HotJobs or Monster and see if your job is in demand. Always check Salary.com for pay levels. Note: More and more HR departments will have seen this data and have stock answers against the data like, "oh this area is different", "your job is different then this one." Ask them for Their latest salary survey, to show you their side. Maybe your info is wrong, but if they don't have it, they don't know.
5. If Something looks Interesting Apply/Interview - Ever notice that when you have a job everybody talks to you about coming to work for them, but when you are looking it is a ghost- town? Know why...because you don't reek of desperation! Who cares if you don't get it if you don't care? You will at least meet great people and who knows, it may be a great opportunity!
6. Show your Boss a Plan that gives them more ROI - Don't just take. If you want a 10% raise, ask yourself, "what is in it for them?" Make up your own job/title if there is no career path. I have done that multiple times and came away with a title that didn't exist before because it made economic sense for the company. This allows your boss to show his boss that this is a win/win for the company and not just someone asking for more money.
7. Be Prepared to Walk - You know your companies culture. Do they match outside offers? Do they then kill those people and eat their brains? (Otherwise known as holding until THEY find a replacement) If the company is known to be tough on those that fight for more (some companies don't care what their turn-over is like) Will you move (maybe even across the street) if they can't do this?
8. What if?...If they still won't move, frankly you have to. We are now in a workforce that will have 3-4 major jobs in their worklife. That mean one way or another you will probably need to move every 5-7 years to get to the next level.

I was lucky enough to have a great mentor in a EVP of Sales and Marketing that taught me this. He was never my boss, but he was one heck of an advocate for me. From this roadmap I was able to triple my pay in less than six years and became a Vice President.

If you don't really want to make more, then DO NOT follow these steps. They require a lot of hard work, hours and sacrifice, but if you do, then begin by mapping out your career as well as you do your budget, it is one of the most important thing that you can do for your financial future...