10 money mistakes to avoid repeating
Page | 1 | 2 | 3 |

Instead: Put away a certain amount regularly until you hit the contribution limit, Hollander says. "We have clients who put away $500 a month until they reach the maximum," she says.

8. Paying everyone else then resolving to save "whatever is left."

The cost: If all you've saved is scraps here and there, that's what you'll have at retirement.

Instead: Pay yourself first, say Hollander. Take at least 5 percent to 10 percent of your check to max out your retirement plan, she says. After that, save outside the retirement plan. Unless you're starting young, "the reality is that just saving in a 401(k) today is not going to potentially be enough money to retire on," says Hollander.

9. Not managing your investments. You're saving the money. But you also want to make sure your nest egg is diversified and that you have earning goals for various aspects of your portfolio. "Everyone's target is going to be different," says Ritter. The problem is that too many people aren't making the attempt.

- advertisement -

The cost: Balancing and managing your investments can mean the difference between a good year and a bad year, Ritter says. He recalls reading one study of mutual fund investors who focused solely on blue chip investments and saw a 2.5 percent return on their money in 2005, while those who were more diversified earned almost 6 percent. Add in compounding interest year after year and that gives you an idea of the real cost, he says.

Instead: Look at your holdings like the pieces of a puzzle. Why do you have various assets, and what purpose do they serve toward your goal? What are your goals for each asset, as well as your investments as a whole? Is your portfolio meeting those expectations?

10. Getting emotional about your investments. Two big mistakes: People fall in love with their investments and hang onto them "beyond the point where they should," or, when the investment starts going down in value, "greed kicks in" and they want to hang on until it bounces back, says Simon. Neither strategy is smart.

The cost: "In a down market, like 2000 to 2002, people lost a lot," says Simon. "It wasn't unusual for people to come in and their portfolios were down 50 percent to 80 percent."

Instead: When it comes to timing the market, "nobody can do it," she says. "The smart thing is to invest in a very diversified way. It isn't sexy, but it works."

Dana Dratch is a freelance writer based in Atlanta.