Long Term Care Highlights
By Joel Zimmerman

Retirement Planning Tip: 6 Habits for Millennials and New Investors

When it comes to saving for a financially secure future, millennials and new investors often ignore the importance of saving for their retirement. Typically, they are more focused on saving for the down payment for their dream home or being in a position to buy a new car, save for their children’s education, exotic travels and perhaps an emergency fund.

Yes, saving for retirement is pretty much the last thing on their minds. Millennials and new investors fail to understand that not making provisions for their retirement now could lead to almost empty pockets later, due to high medical costs in old age. They are also at the risk of losing out on their comfortable life, which will be integral as they near retirement.

The following are 6 habits millennials and new investors should inculcate in order to be financially independent till the end:

  1. Compounding only works in your favor if you start saving for your retirement early

    Compounding is the golden ticket to make your money grow faster and better than ever before. All you have to do is have a steady stream of income and try to save on a regular basis (at least quarterly), for it to work in your favor. Remember, borrowing money can break the cycle and end up working against you.

  2. Invest in indexes but understand that you cannot beat the unpredictable market

    Using indexes is the best way to match the performance of the market, and a strategy like that has the potential to beat the market on its own in long-term earnings and impressive gains along the way. Hence, passive management and indexing are the way to go for those with no investment experience, and they don’t involve taking on any added risk.

  3. Hold on to your investments, let them reap gains and avoid getting burnt

    Inexperienced investors can face lots of trouble by relying on insider tips and tricks for timing the market, which can only lead to loss. When you have a lot invested, it becomes easy to get emotional and make indecisive moves that are likely to turn out bad for you. Avoid trying to time market fluctuations, trust the investments you’ve made and hold on to them to reap long-term gains.

  4. Chasing short-term returns can lead to bad decisions – the market always reverts to the mean

    Do not let short-term changes in the market influence your investment strategy. Investing trends come and go, and the market is most likely going to revert to the mean a few years down the line. Look at the long term, don’t follow the flock blindly and trust in your own investing strategy.

  5. Funds that ask for low fees to maintain are more likely to offer higher returns

    Believe it or not, research has proven that investment funds that ask for low maintenance fees normally show better returns. Also, the past performance of a fund is not always a viable indicator of its future performance, so invest less and reap more by relying solely on the expense ratio.

  6. Diversification is the ultimate strategy to curb risk and get the maximum out of your investments

    Diversification is the best tool in the shed when it comes to minimizing your risk as it works diligently to attain higher returns for you in the long term, through a varied investment portfolio of various asset classes and investments in different sectors. The idea is to keep your goal in mind while choosing assets that range from bonds and stocks to other vehicles.

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