Top Mistakes for 20s?
- Overspending: when you are in your 20s, you have just started working and earning. Hence, you don’t know exactly what to do with your money. With ever increasing advertisements on social media, it is just too easily to overspend and under save.
- Defer retirement saving: retirement seems too far away when you are in your 20s. While financial awareness is low, you forget the power of compounding interest and hence ignore long term saving and investment.
Top mistakes for 30s?
- Taking financial products lightly: In your 30s, you are being approached with a lot of financial products like insurances and investments. Without proper product knowledge and detailed analysis on your finances, you ignore the important financial products or buy unnecessary products that have an impact on your finances. I’ve seen both scenarios when clients do not have sufficient insurance coverage when there are a lot of loan commitments and clients who overbought insurance saving plans. Similarly, to investment products, I’ve seen a lot of my friends doing investments without proper portfolio asset allocation.
- No proper planning for kids’ education: In your 30s, many underestimate the financial commitment for kids’ tertiary education. The best time to start planning is when the kid is small and not when it is just a few years to tertiary education. I’ve heard the story that a lot of the EPF contributors took out their retirement money for their kids’ education when they reach 55 years old, make sure you are not one of them.
Top mistakes for 40s?
- Do not look at the investment portfolio: When the age increases, the risk appetite shall reduce accordingly. Many do not adjust their investment portfolio when age increases. When the market fluctuates, these people are not able to withstand the volatility.
- Passive income generation: when you are in your 40s, it is time to start shifting some of the capital gain investments to passive income investment. Many ignore this and mainly focus on capital gain. This jeopardizes the post retirement income generation.
Avoid the top mistakes above and you are sailing faster than anyone else in the financial freedom journey!
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