Finance: Reflections from 35 years as a financial adviser | Business ...

Here are some reflections on 35 years as a financial and tax adviser:
Dumb Tax Mistakes

• ?Paper-filing your return ? think: slow and keypunch errors
• ?Fudging the numbers
• ?Failing to file or filing late ? think: big penalties
• ?Using the IRS as a savings account
• ?Not taking deductions you are entitled to in the mistaken belief it will decrease your chances of an audit ? guess again
• ?Turning long-term capital gains into ordinary income by not waiting a few days
• ?Buying municipal bonds because they are ?tax free?
• ?Doing anything just because it is tax favored or deductible
• ?Failing to do tax loss harvesting with your portfolio ? think: interest-free loan to the IRS
• ?Assuming tax rates will go down ? think: You have got to be kidding
• ?Having large life insurance policies without a irrevocable life insurance trust ?? think: gifts to the IRS
• ?Not doing annual gifting if your estate will be taxable

Tim Terry

Dumb Investment Mistakes

• ?Not diversifying ? think: roulette
• ?Leverage, leverage, leverage
• ?Not understanding investments ? think: four years in college to understand how to make a living and not investing time to learn the fundamentals of investing
• ?Not having an investment philosophy
• ?Expecting investments to conform to ?your? timetable
• ?Putting all your investments in a country with only 4 percent of the world?s population and a mountain of debt ? think: USA.
• ?Ignoring emerging markets
• ?Setting unrealistic expectations on investment performance
• ?Assuming real estate, wages, stocks and investments will continue to go up ? think: gravity
• ?Using your home as a credit card
• ?Not using 529 Plans for your children?s college savings ? think: tax free
• ?Following the headlines to inform your investment decisions ? think of a boy with a yo-yo walking up the stairs
• ?Complacency ? I know it is a pain to get rid of those losers but ?
• ?Failing to think long-term ? successful investing is about slow and steady accumulation of assets over time
• ?Holding investments to get long-term capital gains treatment without considering market risk

General Financial Mistakes

• ?Impulsive decision making
• ?Spending to your earning level ? think: Oops!
• ?Not staying on top of declining interest rates to refinance loans ? the banker is not going to call you
• ?Assuming you have to refinance to get a better rate because your mortgage has been sold on the secondary market
• ?Deciding that vacation home is just what you need, then having to finance it
• ?Failure to carry adequate life insurance
• ?Failing to have a will ? think: chaos and lots of fees
• ?No estate plan to minimize taxes ? think, again: gifts to the IRS
• ?Ignoring reality ? hey, a budget is just reality
• ?Thinking Social Security will be there for you ? hello!
• ?Not setting financial goals and sticking to them
• ?Not reviewing your financial plan at least annually
• ?Putting off saving for retirement until your later years ? think: $2,000 a year for 25 years earning 5 percent grows to almost $100,000
• ?Lottery mindsets
• ?Allowing emotions to influence your financial decisions
• ?Not living within your means
• ?Having no rainy-day fund
• ?Living on credit
• ?Not waiting to purchase something with cash
• ?Not saving when times are good
• ?Trying to keep up the Joneses
• ?Keeping up with the Joneses
• ?Not having adequate health insurance
• ?Not teaching your children to be financially responsible ? think: ?The Return of the Dependents?
• ?Not establishing good credit
• ?Missing a great educational opportunity by not learning from your financial mistakes
• ?Following the blind: advice from friends who may know slightly more than you
• ?Loaning money to family or friends
• ?Acting as a co-signer

Other Financial Mistakes

• ?Skipping a loan payment (Skipping a payment now only adds a payment at the end and you pay a lot more in interest.)
• ?Extended warranties
• ?Payday loans
• ?Incurring prepayment penalties without obtaining a correspondent interest benefit

And let?s not forget Tiger!

• ?Tiger Woods tried to sell an image while privately maintaining a completely opposite life style. This resulted in the loss of endorsement deals, a drop in his game and a very expensive divorce. Talk about financial disasters.

Source: http://business380.com/2012/01/29/finance-reflections-from-35-years-as-a-financial-adviser/

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