Monitor how your own psychology interferes with successful retirement investing.
Many retirement investors read books and articles in the search for good advice about managing their own IRAs. What few of those authors discuss is the necessity of monitoring one’s own personal psychology, to ascertain whether one’s own traits might be interfering with successful retirement investing.
For example, consider the hypothetical Hugh G. Reacher. Mr. Reacher is wondering why the balance of his IRA keeps shrinking, even though he makes regular contributions. If he paused to examine whether his personality was impacting the types of investments he was making, he might realize that the inclusion of the Direxion Daily Small Cap Bull 3X ETF (NYSEARCA:TNA) could provide a big hint. Leveraged ETFs are always bad ideas for retirement accounts. Triple-leveraged ETFs are simply bets. They are not investments. If you want to gamble, go to Vegas. At least you can get free food there. If you are the type of person who makes wild bets with your retirement savings, make efforts to eliminate that practice.
Make sure you do your more risky investing in a trading account rather than your retirement account. Make more cautious investments with your retirement savings and be sure to keep your portfolio diversified. Toward that end, you might want to consider the Guggenheim Multi-Asset Income ETF (NYSEARCA:CVY) or the First Trust Multi-Asset Diversified Income ETF (NYSEARCA:MDIV).
Another psychological obstacle encountered by many retirement investors is a lack of sufficient self-discipline to build a significant retirement portfolio. Sticking with the minimum payroll deduction for you company-sponsored 401(k) plan is one way to deprive yourself of a robust retirement income. Think more about how much you can set aside for retirement rather than how little you can save. Next time you decide that you can afford to take your significant other to that new, high-end restaurant, ask yourself how much extra you can add to your retirement account when the time arrives for your next contribution.
The last word: Retirement investors need to make an effort at self-monitoring, to ascertain whether they have any bad habits or other personality traits which can become obstacles to successful retirement investing.