1. Skipping Research on where or when to invest will make you buy too fast or too slow.

2. Misjudging Risk- Learn about investment from pros or get a mentor, or join an investment club.

3. Misunderstanding Red Flag / Sign: at times when investments are showing dangerous signals, some investors cannot feel, see or understand its implication.

4. Losing Sight of the Big Picture: Investing in complicated deal without getting the right tool or approach.

5. Relying on Message of the Boards: not every information from the management or board is genuine, scrutinize before you act, those who relied on Cadbury, Unilever, Wema bank plc boards and management can understand better.

6. Trading Beyond your means- don’t toy with other people’s money; the market is full of risks, invest when you know where its heading towards.

7. Have a game Plan- Know when to exit; don’t be greedy.

8. Don’t invest for excitement but for business and make money.

9. Keep a database / record of all investment transactions because tracking your investment is the major catalyst to making money.

    10     Remember rule  1-9 and keep it simple.

For investors still fighting with themselves over whether to stay invested or head for the hills, a fascinating new study sheds light on exactly why these decisions are so hard to make.

It’s not just the “in or out” decisions, but also the ones revolving around whether to save for retirement or the kids’ college education, whether to take a minimum IRA distribution from cash holdings or stocks and more. In this kind of market, everything seems a bit tricky, and has the potential to go against conventional wisdom.The November issue of the Journal of Financial Planning features a piece by finance professors Robert Weigand of Washburn University in Kansas and Robert Irons of Dominican University in Illinois, looking at the effect of “withdrawal sequencing on the longevity of retiree’s portfolios.”In plain English, that means it’s looking at whether you should unload your stocks or bonds first in order to make your money last the longest.The authors looked at three possible withdrawal strategies: one where the retiree sells all of their bonds first, another where they sell stocks first, and a third strategy where they pull the money they need to live from each asset class in a 50/50 split.Based on 136 years of historical data, the professors concluded that consuming the entire bond portion of one’s retirement portfolio first results in the portfolio lasting longer than the other two strategies roughly 90% of the time. The strategy - which eventually will leave a retiree with an all-equity portfolio — on average extends the life of the holdings by 2.3 to 3.8 years.Portfolio PreservationLook at a chart showing the historical returns of stocks and bonds, and the result is hardly a surprise. Past performance shows that equities outperform bonds over the long run; consuming bonds first gives stocks more time to deliver that edge.That’s why there is plenty of retirement research and conventional wisdom suggesting that retirees keep a big slug of their money in equities regardless of market conditions.The 50-50 split is the second-best choice historically, because it captures at least some of the equity edge, with the sell-the-stocks-first strategy providing the fewest years until the portfolio is depleted.With that research in hand, it would be easy to assume that the authors would push investors to stay fully invested in equities.But these are interesting market times that sometimes require going against conventional wisdom and history. The authors suggested that retirees go against the grain and consider selling stocks first, even if it has the potential to exhaust a pool of assets more quickly.Specifically, the professors found that the bonds-first approach worked best at times when the spread between stock and bond returns was biggest. They found a sure-shot indicator of when to go bonds-first by studying the 10-year trailing earnings for stocks and bonds and looking for the widest possible spreads.Right now, that indicator shows that, despite the historical results, it’s not worth the risk to sell the bonds first in a retirement portfolio.Retirement MindsWithout getting too deep into the study, the results come back to the crux of decision-making problems.Many investors believe they know the “right way” to go, but market conditions make it so other decisions not only feel good and look tempting, but may in fact turn out better. An investor who has stayed in the stock market, for example, clearly knows that it’s a bit late to head for the exits now, without becoming the poster-child for buy high, sell low.But they lacked the foresight to get out of the stock market a year ago (or longer), and they can’t rewind the clock. They can only go forward, balancing the decision between the way conventional wisdom says things will turn out versus the way they feel when they open their 401(k) statement.Likewise, I recently received a letter from Nanci F. in Natick, Mass., whose oldest child will head off to college next year, but whose retirement nest egg has been gashed roughly by the amount she has set aside in a college-savings account meant to pay tuition. She’s wondering whether she might want to dump the 529 plan in favor of plugging the big gap in her retirement savings.There’s no “right” decision. Joseph Hurley, who runs SavingforCollege.com, notes that if the 529 account is in the red, the money can be withdrawn without penalties or taxes (otherwise, any profits in the account could face a 10% penalty plus ordinary income tax).But the real issue, he points out, is “What are you going to do with the money, and how do you make sure that it pays for something you value — like college for the kids or retirement for you — rather than just making a move because it feels good right now.”Similarly, many seniors facing required minimum distributions on their individual retirement accounts are wondering whether they should take the payout from cash or whether they should liquidate stocks.The longevity argument — as detailed in the Journal of Financial Planning article — would indicate that someone who doesn’t need the money might want to let the long-term investments ride. (An investor can withdraw money from the account without liquidating securities, so that shares in stocks or mutual funds are simply transferred to taxable accounts.)“Either way, cash or stock, the taxes are the same, because they are based on the value of earnings in the account,” says Ed Slott of E. Slott & Co. in Rockville Center, N.Y. “It comes down to what someone can get comfortable with.“That’s the way it is with a lot of decisions right now,” Slott added. “There is what you have done to now, and what you have to do to be comfortable next, and it’s not always as easy as looking at some formula or figuring out the tax rules. Sometimes, it’s just what it feels like in your gut

 Now that Barack Obama will be our 44th president, it’s time to take a closer look at how his proposals could impact Americans. With a slumping economy and bearish financial markets taking a bite out of nest eggs, retirement issues are at the forefront of many Americans’ minds.

Even before the financial crisis dominated the campaign trail, Obama offered proposals to make Social Security more financially sound and encourage Americans to save more for their golden years. More recently, he has put forward temporary measures designed to ease the pain of the market downturn for retirees and workers alike.

Here are the key elements of his plans:

 Temporary Assistance

Obama proposes allowing working Americans to make withdrawals of up to 15% from IRAs and 401(k)s during 2008 and 2009, to a maximum of $10,000, without triggering the standard early-withdrawal penalty of 10%; the withdrawals would still be subject to income taxes. Obama supports temporarily suspending mandatory minimum withdrawal rules for retirees over 70. He also proposes to temporarily waive taxes on withdrawals for those who do withdraw up to those minimums.

 Retirement Plans

Obama proposes matching 50% on the dollar for the first $1,000 of retirement-plan contributions for families earning less than $75,000 a year, to encourage savings. He also has proposed requiring employers that don’t sponsor employee retirement plans to set up automatic contributions to IRAs for employees, with provisions allowing workers to opt out.

 Taxes

Obama proposes eliminating income taxes for seniors making less than $50,000, which the campaign estimates will save 7 million seniors an average of $1,400.

 Social SecurityObama supports increasing payroll taxes on annual income over $250,000, perhaps by 2% to 4%, to improve Social Security’s financial position; currently, only income under $250,000 is subject to the 12.4% withholding tax, which is split between employers and employees. He opposes increasing the age at which Social Security benefits may be collected, which is another commonly cited fix for the program, and also opposes privatizing benefits.Whether Obama will be able to enact his proposals remains to be seen, but in the wake of the economic crisis, the next four years could prove to be landmark years for reform. 

Lets know what you think.

1. Don’t retire impulsively.

Each year, the Employee Benefit Research Institute surveys Americans, and every year without fail they tell the pollsters that they plan to retire at age 65. Regardless of what they say, though, retirees usually bail at age 62.

“There’s a disconnect between what people say they will do and what they end up doing,” observes Alicia Munnell, director of Boston College’s Center for Retirement Research. Munnell used to find this reality puzzling, but she thinks she’s found an intriguing reason to explain the behavior.

“The decision to retire is sometimes made for superficial reasons,” Munnell says.

She’s heard many stories of older workers quitting suddenly because they had been stuck on airplanes too long during business trips. She heard of a woman recuperating from a sprained ankle who decided she really liked to watch daytime television, so she retired. Some quit because they were peeved at younger bosses.

Leaving in a huff without developing a solid exit strategy, though, can be financially foolhardy. 

2. Invest in stocks for the long term

Plenty of investors turn timid as they age, so it’s no surprise that many retirees consider stocks off-limits. What they fail to realize is that an ultra-conservative portfolio stuffed with bonds and certificates of deposit can’t keep up with inflation. 

Adding stocks to a retirement portfolio can boost your returns without exposing you to reckless risk. “If you have a portfolio with 20% to 30% stocks, your volatility is about the same or less than if you bought long-term bonds,” says Larry Swedroe, an investment adviser in St. Louis and the author of The Only Guide to Alternative Investments You’ll Ever Need: The Way Smart Money Diversifies Risk.

3. Seek pension help.

Those lucky enough to retire with a pension must often decide whether to take a lump sum or a lifetime of monthly checks. Grabbing that huge chunk of change all at once is exceedingly tempting, but retiring workers should consider consulting a pension actuary before making such a momentous decision.

4. Delay Social Security.   

You can start collecting Social Security checks at age 62, and most Nigerians go for it. But their eagerness can curtail their retirement income. If you delay Social Security past age 62, your benefits will increase significantly. 

5. Be a smart investor.

What’s required to be a successful investor hasn’t really changed from the days when stock prices were ripped off ticker tapes.

“The whole purpose of investing for the long term is to make your money grow faster than inflation deteriorates it, ” says Lewis Schiff, author of The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America. “For those investors who take the long view and practice the simple arts of diversification, compound returns and dollar-cost averaging, this growth is well within reach.”

If you’re not confident in your own investing skills, consider using low-cost target retirement funds offered by big mutual fund companies.

                                    Don’t you think that every man and woman should be entitled to a good and well secure retirement plans when he or she retires from work? Due to the fact that we have made great strides with healthcare and medicine, many of us are living healthier and longer lives. This leads to spending a longer period of time in retirement. In order to attain the goal of a comfortable and secure retirement, you need to plan for your retirement wisely using a blueprint such as this:

Save, Invest, Save Invest

The sooner you start this the better. No matter how much you earn, always remember to save. A part of what you earn should be yours to keep. It might be boring. It might be dull. No matter how it may be, just do it.

Set Goals Which Are Realistic.

Don’t use rules of thumb to project any of your future retirement expenses which are based upon your needs. Decide what type of lifestyle you want to live when retired and figure out the expenses. Next, formulate the amount of money you would need to save in order to supplement your Social Security and any other retirement income sources.

Consider 401(K) Retirement Plan

Making contributions towards a 401(K) provides you with immediate deductions on your taxes, employer matched contributions (most of the time) and a tax deferment on the growth of your retirement savings. This is great advice for anyone who ever wondered on How do I plan for retirement?”

IRAs are capable of providing your retirement savings with a tax-advantaged aid.

IRAs, like 401(K)s, provide you with large tax breaks. They offer two kinds: a traditional style IRA which provides you with growth that is tax deferred, which means taxes are paid on your retirement investment gains when you withdrawal money. Roth IRAs provide you with tax-free growth but do not allow you to make deductible contributions, which means if you make a withdrawal you wont owe any taxes.

Make Wise Asset Allocation Moves Rather Than Using Too many Individual picks.

This means that, when seeking for advice from  your investment planner, he should remind you that you need to divide the portfolio you have between both bonds and stocks wisely in order to make a good impact on retiring  happily.

For Stable Long-Term Growth, stocks Are Your Best Option.

If you want to attain a high rate of return over a longer period of time, then stocks are the best way to go. Having a nice portion of your portfolio taken up with stocks will ensure that the retirement savings you have will grow more rapidly than inflation, giving that nest egg of yours increased buying power.

When planning for retirement, don not rely too much on bonds.

 A lot of retirees end up trying to allocate the majority of their retirement portfolios into bonds trying to get the majority of their income that way. This is not advisable at all.

To stretch out your nest eggs life, make withdrawals that are tax-efficient.

Let accounts considered tax-advantaged compound over time (or as long as you can wait) and instead draw money out of your taxable accounts to start with which allows your investments to last many more years.

Having a part-time job when retired is very helpful for a few reasons.

First off, having an income will reduce annual withdrawal amounts that reduce the total value of your nest egg. Second, having a job will keep you engaged in a social environment.

Every Friday, Ken and Daria Dolan answer questions from Retirementsketch readers. This week, the Dolans field a timely topic on the minds of millions: In this turbulent and uncertain economy, how should you allocate your retirement funds?

The benefit of teaching children about money are substantial. By understanding savings, investing, and borrowing, children can develop fiscally responsible habits, enabling them to be better prepared for financing their college education, to avoid debt problems, and get on the road of a comfortable retirement.

Unfortunately, most school don’t teach children the basic financial skills that they will need throughout their lives, so that responsibility falls on you, their parents.

Although there are different school of thought regarding teaching children about money, many experts recommend teaching your children the following lesson in this order

  1     Money is earned by working, not given freely.

  2     Money is saved in order to accomplish certain goals.

  3     A bank is often used to save money

  4    You can earn interest by investing.

 5     Money that is borrowed is repaid with interest.

 6     In the long-term, compounding magnifies the effect of interest.

You can begin to teach your children about money as soon as they notice it. If you fail to do so, they may believe that ATM machine or a check book offers infinite buying power.

The first direct experience many kids have with money is an allowance. Parents should use the allowance to teach kids about the value of money, and of saving it i other to be financially independent.

Experts disagree about whether an allowance should be tied to household chores. Some say doing so sends the message that child should only do the chores for the money, not out of a sense of responsibility as a family member. My solution is to require your children to perform certain chores, and to pay them for additional duties they perform. This becomes more viable as the children get older. Regardless, make it clear at the outset what types of purchases the allowance can and can’t be used for.

Encourage your children to save a part of their allowance for a long term goal. Younger children will be reluctant to put their money in bank account miles away, so start them with a piggy bank account when they are comfortable with it, probably when they are 8-10 years old. Have them set specific saving goals (for example, a new bike by next spring), and check their progress with them periodically. You might even want to draw a chat showing monthly progress, so they can watch the savings grow toward their goal.

Since children tend to be less patient than adults and might be disappointed by how slowly their money grows in a bank account, you might want to offer a matching system. For example, you could give them a bonus naira for every naira they are willing to promise to use towards some long – term goal. The matching bonus should be lager for younger children, because patience takes a long time to learn. You may even want to offer lager matching bonuses for more worthy goals.

The next logical step is checking account, but you should be careful to monitor their use of it to confirm that it meets your standards. This is also a good time to explain how bill paying works. You might even want to get them involved in some household spending decisions, so they get used to comparing the costs and benefits of various expenditures.

          Finding a secure retirement plan means charting the right course. People who are enjoying retirement benefit today are the ones who had alternative plans apart from the normal retirement pension scheme, in a society where governments are inept to guarantee their citizenry permanent social security retirement, the only way out is individual retirement planning with available options.

Over the years, many retirees in Nigeria had anchored their retirement income to investments returns from stocks, because of the wonderful compounding returns many have turned millionaires at retirement age.

Though it is an investment that comes with a lot of risks which only careful planning and in-depth knowledge can help the players or investors succeed.

Retirement investment in stocks remains one of the most dependable retirement options for retirees or employees planning to retire right. Nigerian Capital market ranks the best global emerging market and what that portends to any investment savvy employees, is that it is the best time to enter, and it is still the best place to create wealth.

These are 10 reasons why you must invest in stocks. 

·        Liquidity: Because of the liquidity nature of the market, investors can sell their stock anytime they feel and in three days their check will be ready.

·        Capital Appreciation: The share price will increase in value and with this, investors are opportune to sell at the rate they so much wish.

·        Bonus And Right Issue: Investors are often rewarded with additional shares at intervals while some companies have a history of bonus issue like First Bank Plc and right issue is the opportunities companies give to shareholders, the right of being a preferred buyer of certain percentages of their offers.

·        Dividend: This is the payment of certain percentage of the company’s annual returns to the share holders.

·        Annual General Meeting: Every investor of companies listed on the exchange is entitled to a sit during Annual General Meetings.

·        Equity: There is fairness in the market; the confounding structure of the market allows for equity and fairness among every player.

·        Collateral: Stock investors can use their share certificate or CSCS Account printout as collateral for banks or any financial transactions, it is legal tender.

·        Flexibility and Diversification: Stock investment allows for flexibility and diversification from one sector of the economy to the other.

·        Co-Owner: Since you are a shareholder in the company you are holding their stock in your portfolio, you have every right like the board on any issue that affects the company or in every benefit.

·        Transferable: The share bought by anyone is transferable, from one person to the other; it is even inheritable, that is it can be bestowed on dependants, next of kin or generation unborn.

Unless you understand the real meaning of retirement planning, that is when you can say that it is the right plan for you. You need to know in time when there is a need for further change in plan. In this world, we need each other for a successful future plans. In what ever we are doing, we should know the benefit we will get at the end. Try to ask yourself these questions because it’s very important.

Most Companies nowadays offers some sort of retirement plan to their staff. This means that some individual or group of people are responsible for management of these plans. For retirement planning to be successful, one has to follow the rules of retirement.

Retirement Plan Flow chart

Retirement plan flowchart is one of the ways of tracking your retirement plans. The flowchart gives you the graphical illustration of all the activities that take place during the retirement planning process.

This will show you the workability of the plan and your total amount of money before your retirement age set in. To get this perfectly, there are some special softwares you can buy, that will draw it graphically and it will also answer all your retirement questions.

Some things you need to know

Some of the things you need to keep in mind are as follows:

1) Always be ready

2) Start your retirement planning as early as possible (at the age of 25 years)

3) Set aside some money, even if you not sure of which retirement plan to carry out.

4) Tax-Sheltered Plan, this can be called 401(K) plans. Its wise to join such a plan or program and put as much money as you can possible afford in it. Your employer is allowed to put extra money on top of the portion you put in. They will get a tax deduction for this as well, so everybody will be happy with this type of plan.

5) Investing your money: The way you save is as important as how much you save.

In conclusion, most people wish that they could have started their retirement planning at the age of 25. This might seem to be laughable to you but the idea is not strange. The younger you start, the more you will achieve.

No matter how much you save, you need to put some amount aside if you want to enjoy this golden days.

Remember, Tomorrow belongs to people who prepares for it today. Happy Retirement.

(This post is justs follow up post - Most Dependable investment options for Retirement)

1) Annuities / insurance Policies: Among all investments, this is one investment that can possibly outlive the investor and it is bequeath able to descendants who are next of kin.

2) Multi Level Marketing (MLM): This is an innovative marketing approach for fast moving goods that enable subscribers to have down-liners and earn residual income from the business throughout the period of the business. Enjoy the benefit of leveraging.

3) Investment Club: It is better to associates with people of like minds. Join forces with others to create wealth while adding fun to your life.

4) Build your Own Business: If you are healthy enough build a cottage industry or invest in agro-business; it is one of the oldest retirement options in most emerging nations of the world.

Wiseman Strategy: There is no perfect tailor- made or clear cut agendum to retire rich and happy, but to be financially connected to the right knowledge always creates the opportunities for retirement without tears. The above options are the Wise men’s approach and to be successful is to have the awareness as to when to buy, what to buy, how to hold, protect, and when to sell or divest.

Age, class, educational attainment or region are no guarantees of getting retirement plan right, But perfect retirement lies with individual’s financial goal, the ability of everyman to create wealth, manage wealth and to multiply wealth makes HAPPY RETIREMENT.