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We Should Be Play It Too Safe When It Comes To Investment
[Image: WE-AB217_FINIST_9U_20161021144507.jpg]

Our relationship to money changes as we get older. So do the mistakes that we make with it.

Every new stage of life brings new financial strategies we need to follow. And at every stage we find new ways not to follow those strategies, costing ourselves money and jeopardizing our security.
What’s more, economic and demographic changes ensure that those mistakes aren’t static, so that the mistakes of the current generations aren’t the same missteps that their predecessors struggled to avoid.
For instance, when we’re first starting out in our careers, we need to be aggressive with our investing so we can build a nest egg that grows over decades. But research shows today’s 20-somethings hold back on investing or make very conservative moves, because they’re uncomfortable with big risks.
Meanwhile, these days more people are waiting until their 30s to take big plunges like marriage and children. That means a lot of complex financial questions piling up all at once, and many opportunities to mess up. In their 40s, people often fail to pay down a mortgage quickly enough, leaving them covering the costs into retirement. And they don’t pay enough attention to how college expenses—or the cost of providing for children and aging parents at the same time—will affect their finances.
Our fifth decade, unfortunately, often means realizing we’re going to come up short in our retirement savings, sometimes because we’ve lived too large or because we’ve made plans that are too ambitious, such as launching a business. Finally, in our retirement years, we often don’t make an uncomfortable but necessary move—giving family members the power to make big financial decisions for us—even though research shows most of us need that help a lot sooner than we realize.
Here’s a closer look at some of the biggest mistakes we make, decade by decade—and how to avoid them.
20s: Playing it too safe

The first full decade of adult life should be about investing heavily, experts say. Yet 20-somethings don’t take enough risks with investments to build up big returns. It’s a conclusion backed up by a number of studies, including a 2016 analysis by Lindsay Larson, an assistant professor of marketing at Georgia Southern University’s College of Business Administration.
Her team sampled a group of roughly 100 millennials and found that they tended to favor retirement accounts with little stock and more guaranteed income—choices that would bring skimpy returns over time. When asked why they chose such a conservative portfolio, participants said things such as, “I honestly know nothing about money right now,” but explained that a portfolio with a lower risk level seemed like the “best option.”
A majority of the sample “were selecting retirement portfolios more appropriate for employees nearing their retirement, rather than starting their careers,” Prof. Larson says.
Her study draws on literature that finds that millennials have particularly low financial literacy. Additionally, her study suggests that millennials often struggle with independent thinking, decision making and risk taking because they fear making mistakes. Ms. Larson notes that this lack of risk tolerance is unique to current 20-somethings, and may stem from periods of financial uncertainty during their lifetimes, from 9/11 to the financial crisis.

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