We all make mistakes in life, and that fact of life extends to our investments as well. We all make investing mistakes. I know that I have made quite a few over the course of the past decade. Whether you have withdrawn money from a retirement account early, not invested enough to capture your employer’s 401k matching contribution, or even not saved as much as you should have, the real question is what to do now. How do you recover from mistakes?
Get Back Up on the Horse
When you fall off a horse, you have to get right back up and try again, and the same is true when you make an investing mistake. Have you used your 401k as an emergency fund?Do you fail to maximize your Roth IRA contributions each year? All of that is in the past. Get back up on the horse and go again. This is the year and now is the time to do things right. What is past is past.
Increase The Amount You Are Investing
If you have made investing mistakes in the past, you may find that you have to invest more in the future to make up for those mistakes. If you have taken out a 401k loan, for example, you may want to consider increasing your annual contributions to a percentage that is higher than you would have done originally in order to try and make up some of that lost ground.
Change Your Investing Strategy
You may find that you are making investing mistakes because you have a poor investing strategy. Are you trying to time the market? You may want to consider index funds that simply mirror the overall stock market with an extremely low expense that will keep more money in your pocket.
Another great tool to help you change your investing strategy is using the predetermined ETF portfolios through a company such as Betterment. Be sure to check out my complete review of Betterment and the great investing services they offer. Betterment: Free Sign up + $25 Bonus! Start now!
Waiting Longer To Retire
I will be the first person to admit that this is not a very popular tactic to help you recover from an investing mistake. No one wants to wait to retire, but more and more people are actually doing it thanks to the economy and the need that is there. Maybe you could consider a part-time job or start your own business in retirement instead of simply continuing to work a full-time job in your current career.
Seek Out Professional Advice
If you find yourself continuing to make the same investing mistakes year in and year out, you may want to seek financial advice from a professional. A certified financial planner can help you develop a financial plan, identify your mistakes if you do not know what they are, and help you get back on track.
Recent studies have shown that even having the simplest of financial plans is head and shoulders above having no plan at all. It would seem like common sense, but far too many people go through their careers with no financial plan at all which greatly contributes to your investing mistakes.
We all know that everyone makes mistakes. The most important thing is how we recover from them. Do you simply hang your head in defeat? Or, do you shake it off and get back up on the horse?