As an entrepreneur, you are used to taking risks. You’ve rejected the steady paycheck of an employer to become the employer. You’ve turned personal finances into company finances. You’re even prepared to go down with the ship, although you would really like to make sure that doesn’t happen. Not everything has to be a risk, though. Some investments offer more security than others. With the right planning, you can secure earnings and sleep easy, knowing that a portion of your money is safe and growing.
With a few more days left in April, which has been designated Financial Literacy Month, now is a great time to brush up on savings strategies that may have long-term effects on your financial health. Saving for retirement, for example, is something we all need to think about, but it can be challenging for workers of any age. For those just starting out, retirement may seem like a faraway abstraction full of unknowns, like how much you should set aside from each paycheck or how much you’ll need to accumulate to have the lifestyle you want in retirement. While some of those details may be ironed out over time, there are plenty of actions you can take throughout your stint in the workforce to get closer to meeting your retirement savings goals.
The most common mistake I see new investors make is assuming that the future will look like the past. To be more specific, new investors draw all sorts of faulty conclusions by assuming that the results of one particular period will look like the results of some other particular period. New investors choose mutual funds based on past performance figures, despite the evidence showing that past performance is not a good method for predicting future top performers.