9 Mistakes That Can Derail
Your Financial Security

The best way to stay on track with your money is to take a detour around these common financial errors.

1. Losing sight of the big picture.

Unless you set financial goals and prioritize them, you won't have a road map to guide your decisions.  For example, if your number one goal is to send the kids to college, you may have to put off buying a larger house or taking an expensive vacation.

2. Ignoring insurance needs.

One uninsured disaster can wipe out years of hard-earned savings.

3. Getting into debt problems.

Credit is so easy to obtain that it can take a lot of self-discipline to say "no" to more debt.

4. Sending dollars in the wrong direction.

Fore example, it may make more sense to pay off that high-interest credit card than to try to make an extra payment on your home mortgage.

5. Taking a narrow-minded approach to investing.

Don't get caught in a common investor trap of buying and selling stocks with the single goal of trying to beat the market at all costs.  You risk ending up with an unbalanced portfolio, excessive transaction costs, and taxable capital gains.

 

6. Changing jobs for a bigger salary.

It's equally important to compare the new employer's benefits with the ones you already have.

7. Failing to save for retirement.

If your company offers a 401(k) plan, try to save enough to take full advantage of the company's matching contribution.  That's like free money.

8. Ignoring estate planning needs.

A will and other estate planning documents can save your heirs a lot of heartache -- and maybe a lot of money.

9. Overlooking tax implications.

People often fail to take advantage of legal tax breaks or to consider the tax consequences of financial decisions.  Hiring a savvy tax accountant or financial professional can be money well spent.

Are You Saving or Investing

Many people use the terms saving and investing inter- changeably to describe their financial plans.  In reality, however, there is a big difference.  The purpose of saving is usually to accumulate funds for short-term goals and emergencies.  The goal of investing is to build wealth over time, usually five or more years.

Savers and investors need to remember to match their goals with appropriate savings and investment strategies.  For example, savers should consider a money market fund1 or certificate of deposit2 for expenses tht wil be paid for within a year.  If goals are five or more years away, investors should consider stocks or growth funds3.

1An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other Government agency.  Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
2Bank CD's are insured and offer a fixed rate of return, whereas both principal and yield of securities will fluctuate with changes in market conditions.
3Mutual funds are sold by prospectus, which includes information on charges, expenses, and risks.  To receive a current prospectus, please contact your registered representative.  You should read the prospectus carefully before investing.

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