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Investing is crucial to your retirement and your future, but not everyone actually does it. According to Chief Economist Dennis Jacobe, only 54 percent of Americans invest in the stock market. Nowadays, most choose to invest their money in real estate.

Five things you
should never do

Though it's definitely a plus to own your home by the time you retire, it's never best to put all your eggs in one basket. Diversifying is essential when it comes to planning and preparing for retirement. Also, be weary of common mistakes that people make along the way

Starting too late

It's a common myth that adults think they can begin saving for retirement once they're of retirement age. They believe they still have decades to invest in and own properties. Unfortunately, this is not the reality. At the end of your career, you have no more earning potential. The only money you'll be receiving is social security. The amount you receive most likely will allow you to pay bills and nothing more. The younger you start investing the more time your money has to increase. Take the risks when you're young and still have years and years of earning potential rather than waiting.

Not focusing on the whole picture

People tend to let their emotions get the best of them. When it comes to investing, remember that it's the big picture that counts. If you are properly diversified (stocks, bonds, savings, 401(k)s, real estate), there is no reason to panic. Yes, you may lose big on stocks every few years, but having your money in a variety of places makes it an even playing field.

Trading stocks vs. investing in stocks >>

Jumping in and out

People tend to get nervous and naturally follow the crowd. Pulling your money in and out of stocks and investments will hurt you in the long term. On average, stocks will deliver an 8.7 percent return on investment. Pulling your money out when the market is low only means you're going to miss the next rise (unless you're a psychic). Constant buying and selling will not yield significant results in the long term. Plus, who wants added stress in their already hectic lives, anyway?

Trying to get even

People tend to get emotionally attached to certain investments and want to "get even" before selling. Try to take your emotions out of it. If a company you've invested in has gone south and shows no sign of going back up, get rid of it. Take your loss and move on. There's no point in spending your energy on something that's going nowhere. Angry investing never gets you to where you need to go.

Not having a plan

Don't just randomly invest in things and cross your fingers for a good outcome. Do research, read books, get your spouse involved, talk to professionals. Write out your goals and set timelines for when you want to accomplish them. According to a recent LinkedIn poll, 71 percent of women make lists, but only 11 percent accomplish them. Your dream of retiring to a beach house and traveling the world is in your hands, so make the sacrifices now and reap the benefits later.

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Comments

Comments on "Investing mistakes to avoid"

Michelle September 21, 2012 | 1:15 PM

I like the last point about talking to a professional about investing. Many people (including me) find the stock market very confusing, so it makes sense that there are professionals whose job it is to help people invest their money. I also agree that it is important to start investing early. I didn’t begin investing until I was in my forties and now I am stuck playing catch-up.

Tina September 21, 2012 | 1:13 PM

You can never start too young. I was talking to my dad recently and he's encouraged me to start investing some of our savings. I'm excited to get started knowing that it's going to help my family and I's future.

Hannah September 21, 2012 | 10:56 AM

My husband and I have been discussing investing and I think not having a plan is where most people go wrong. Do something, anything. Research and talk to people to get started.

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