By Stephen Ng
Americans are part of an amazing yet curious phenomenon: most are extremely well-educated in their professions and careers, yet are quite uneducated when it comes to the purpose behind their jobs – money.
“Our society is awash in information about money, but most people still end up making decisions based on emotion and lack of accurate, complete information,” says independent financial planner Stephen Ng, founder and president of Stephen Ng Financial Group.
“This wouldn’t matter so much if our retirements weren’t on the line.”
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Ng, a licensed 3(21) fiduciary advisor, is certified to advise companies about their 401(k) and other retirement plans. He also is author of the new book, “10 Financial Mistakes You Should Avoid,” which helps readers navigate the shifting financial landscape of retirement.
An example of the pitfalls people face when it comes to money, Ng says, are these three common mistakes they make when planning to fund retirement.
• Failure to educate oneself. “My average client has a full schedule: a demanding job, a fulfilling family life and barely enough time left over to eke out a morning jog or catch their favorite TV show after a busy weekend,” he says. “We like to squeeze in fun when we can – if we can – but that doesn’t mean it’s wise or prudent to continue putting off retirement planning, or educating ourselves on it.”
A solid base in financial education is essential for having a good retirement. Start small with something like Barron’s or Investor’s Business Daily. Don’t fall for a well-hyped headline, especially if you don’t understand the logistics of a strategy or product. One size does not fit all, so be wary of any silver-bullet financial solutions, he says. And, don’t be afraid to start from scratch. This way, you can understand money the right way.
• Sleepwalking without a plan. It happens to all of us sometimes – we simply haven’t prioritized forward thinking. For retirement, wading into this period without a plan is like going to the beach and neglecting your bathing suit, towel and sunscreen. If you are approaching this stage in your life with no plan, there’s no use kicking yourself now. But – now is the time to formulate a sensible and realistic plan. Understand your money and your assets and read up on how you might be able to use them. Here, the help of professional advice could prove absolutely invaluable. A professional may see opportunity where you cannot as a layperson, Ng says. A good first step in formulating your plan is having a strategy that is designed to preserve your wealth.
• An inability to fully appreciate diversification. Even though people have learned this lesson over and over again – starting in grade school – many still put all their eggs in one basket one way or another. This is especially problematic with finances. What’s the harm in sticking with one financial product if it’s working? Many people thought the same way before 2008. A financial portfolio more diversified among different investment and insurance products may reduce or minimize loss during an economic meltdown.
“I try to spread my clients’ investments across various asset classes, which refers to a bunch of investments, or assets, that are grouped by their similarities,” Ng says. “These classes included large cap, small cap, mid cap, high yield, international and domestic. Again, professional advice in this and other arenas is advisable.”
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.
Stephen Ng is the founder and president of Stephen Ng Financial Group™ (www.stephenngfg.com). Since 1992, he has helped pre-retirees and retirees preserve and increase their wealth by, in part, helping them avoid common mistakes. He regularly holds financial management, retirement investing and insurance planning seminars at businesses, churches and non-profit organizations. Ng is a Chartered Life Underwriter, Chartered Financial Consultant and a Certified Estate Planner. He is also an Investment Advisor Representative with SagePoint Financial, Inc., member FINRA/SIPC. He brings a national and international perspective to his financial advice, with professional and educational roots in Australia and Asia, and certifications in 19 states. His new book, “10 Financial Mistakes You Should Avoid,” helps readers navigate the shifting financial landscape of retirement. Securities and investment advisory services offered through SagePoint Financial, Inc., member FINRA/SIPC and a registered investment advisor. Insurance services offered through Stephen Ng Financial Group, LLC, which is not with SagePoint Financial, Inc. or registered as a broker-dealer or investment advisor.