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You Say You Want a Resolution?

Many, many New Year’s resolutions are made and some of them are even kept, though often in the breach. Even if you are not one of those who makes one or more New Year’s resolutions, here is one to consider.

If you want to make a resolution that can make a real difference in your life, resolve not to make any avoidable mistakes. I know this is a resolution that is easier said than done. However, if one tries to avoid making mistakes, then there will be fewer of them and you will not lose as much.

This applies particularly in the field of finances which is an area prone to expensive mistakes that we see happening again and again. Some of these mistakes include:
·         Buying or selling out of fear or greed – we saw this at the beginning of the Great Recession when folks sold investments at the bottom of the market
·         Trying to time the markets – you might get lucky some of the time but it is an expensive way to gamble with your future
·         Buying an investment product you do not understand – complex products that are sold as the latest hot investment trend  but are not yet proven
·         Buying a product that carries too many costs – many insurance and annuity products, especially those with multiple riders and features, carry high costs that benefit agents and not purchasers
·         Staying with a broker who does not fully disclose how he or she is paid and how much on your investments – and, worse, failing to ask that broker how he or she will be paid if you buy the recommended investment
·         Failing to invest or staying out of the market – if you need your savings to grow and at least keep pace with inflation, costs and taxes, a money market will not suffice
·         Focusing on performance while ignoring risk and costs – your adviser cannot guarantee what the market will do and what happened in the past is just that, past, while commissions, fees and expenses all reduce that performance in real terms

Avoiding these types of financial investing mistakes will help you to realize greater returns over time and keep more of your money working for you rather than paying someone else. Remember, if an investment sounds too good to be true, it is. 

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