Don’t loan money to friends and probably not to family.
“Neither a borrower nor a lender be, For loan oft loses both itself and friend,” is a quote from Shakespeare’s Hamlet, and financial experts agree the best way to lose your money – and sometimes your relationship – is to lend to a family member or friend. Harlan Platt, a professor of finance and nationally recognized speaker, says neither loan is a good idea.
Don’t save an inheritance for your kids.
- Millennials Are America's Most Disciplined Financial Planners
- Finance Industry Doesn't Like Proposed Rule Complicating Advice
- Make Your Savings Program a 'Live Document'
- Paying for Tuition and Nursing Homes? 5 Ways the Sandwich Generation Can Cope
- Obama's MyRA Proposal Assessed By Financial Advisors
“Inheritance is a gift, not a right or entitlement,” says Jean Gillis, owner of Florida Family Estate Planning in Jupiter. “If you’re 65, you’re in the prime of your life, enjoy it while you’re alive. If there is some left, then fine, have backup in good estate planning.”
Be smart with your inheritance.
Should you receive some inheritance from your grandparents, parents or a favorite aunt and uncle, be smart with it, says Gillis. She says if you put the money into jointly held property, that money will become part of the estate should something happen to you or a marital asset should you get a divorce (the divorce rate among empty nesters has doubled in the past two decades). “Never co-mingle your inheritance unless you want it to become a part of the settlement,” Gillis adds.
Don’t buy the old market story of "Buy and hold," which has become "Hold and pray."
“Investors must have an understanding of what it means to lose money regardless of age,” says Kadish. “We’ve all been told that when we are younger we should be more aggressive and as we age we should become more conservative. Age has been sold as the primary driver of how much risk we should take. Know the return you truly need by having a financial plan created and build a portfolio based on your own situation. If you need more than a 5% to 7% long-term return on your money to hit your goals, wake up. The ride may be bumpier than you can stand. You should readjust your goals and expectations.”
Don’t get on the ride before you know how wild it can be.
“Someone convinces you to get on a ride because you will reach your destination in one hour vs. three hours. The problem is that, once on the ride, you find you are moving too fast and there are twists, turns and it goes upside down,” says Kadish. “You can’t stay on this ride and have to get off. It then takes you six hours to get to your destination when it could have taken three hours if you would have taken the ride you could have been comfortable staying on.” In other words, if you don’t think you can stand the fast moving pace of a new ride, be safe and stay the course.