JAMAICA has an ageing population. This means adult workers and retirees should consider carefully how their retirement years will be funded should they live long.

For the adult investor, mistakes can prove rather expensive as time is a scarce commodity for long-term investing. Don’t delay investing because tomorrow will be costlier than today. Time is considered our most important asset and is of tremendous value in creating financial freedom and wealth. Investing shouldn’t end when work stops and some retirees realised their error much too late.

Here are some mistakes that some adult investors and retirees make.

1. Having no clear plan for retirement. There is little thought about a desired retirement lifestyle and not sure how much funds will be required to live comfortably in retirement. How much do you need to save monthly? A financial advisor can assist in preparing a retirement plan that’s unique to your needs.

2. Procrastinating. With the best laid-out financial plan if investors choose to delay implementing the plan or delay investing, they will fail to achieve their retirement objectives. It’s easy to procrastinate, for example, postponing retirement planning until after the children complete university studies or waiting until there is more money available. This can prove costly. Why not begin with what you have and consistently add to your investment and benefit from the compound growth of your money over the long term? Procrastination is said to be “the thief of time”.

3. Investing money for short-term goals in long-term investments. Stocks are long-term investments. Too often some adults make the mistake of investing funds in the stock market with a short-term time horizon. Example, investing in the stock market to provide for the deposit on your home in two years, only to suffer losses due to stock market volatility. It can prove very costly when stocks are sold at a loss to meet emergency needs. Likewise when funds are withdrawn too early from a booming or bullish stock market, thereby disrupting the compounding effect and slowing down the future growth of the stocks. Your cash reserves or emergency funds should not be invested in stocks but in low-risk instruments, such as bonds and certificates of deposit or high-yielding savings accounts. A simple guide: Funds needed for up to three years should not be invested in the stock market.

4. Impatient in growing your money: Your money needs time to grow. If you are impatient in investing for the long-term, you risk running out of money. Some investors avoid investing in stocks because they are not willing to wait for their returns to compound. They view stocks as too risky. But stocks become less risky with time. As renowned investor Warren Buffet says, “The stock market is a device for transferring money from the impatient to the patient”. He encourages investment in top-performing or blue-chip companies. Don’t watch the price, pay attention to the value.

5. They don’t plan for inflation: If you define yourself as “conservative” with little savings or have most of your investments in low-risk instruments such as bonds, certificate of deposits, and savings accounts, then your money will lose its purchasing power and will not keep pace with inflation. Your long-term money should outpace inflation to maintain value. I have seen seniors worrying about their future after being in retirement for 15 years. They are living with the regrets of having all their investments in low-risk instruments only to see their money buying less and less while they are running out of time. On the other hand, there have been some successful senior investors, who started investing after retirement, and 20 years later they are still in control of their money as it outpaced inflation and they can still afford to live comfortably.

6. Pursuing the latest trends: Without doing enough research, some investors chase the highest rate or promised return on new investment instruments or trading such as the latest cryptocurrency. It’s always best to diversify your investments. It reduces risk and maximises returns. Some years ago I met a senior medical practitioner who invested all her retirement funds in a Ponzi scheme because her younger colleagues encouraged her to go along with them and invest in a risky scheme. She lost all her savings and precious time.

7. Not maximising employer’s matching contribution. Some employers offer to match up to 10 per cent of employees’ pension contributions, yet some employees restrict their contributions to five per cent. They missed out on “free money” that would be invested tax-free until retirement which would boost the size of their retirement nest egg.

8. Too much debt: It’s best to shed debts prior to retirement. A heavy debt load restricts funds available for saving and investing. Except for mortgages, it’s not wise to have debts in retirement. Recently a retiree shared that she was locked out of her account because enough funds were not available to clear a debt with the bank.

A professional and experienced financial advisor can assist you in avoiding these investment mistakes.

Grace G McLean is a financial advisor and retirement specialist at BPM Financial Limited. Contact her at gmclean@bpmfinancial or visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@gmail.com