The reason is simple. If you wait to save for your retirement until afteryou have taken care of your children’s education, you may be effectively out of time. It can be almost impossible to build a large fund for yourretirement in the limited number of years that usually remain between your last child’s graduation and your retirement. Instead, you need to worktoward both goals simultaneously. And – like any long-range activity – thesooner you begin the better.

Some advise that it’s smart to start saving for your child’s college on the day you say thanks to your obstetrician. For retirement, the ideal time tobegin is whenever you start bringing home a paycheck. If you follow thisadvice, you can build toward both your goals at the same time over many years. You can start saving with small amounts every payday and increaseyour savings as your earnings rise. Your result in the end should be muchbetter than trying to invest large sums of money over just a few years in an effort to make up for lost time.

Mistake 2: Investing Conservatively For Long-term Goals The more time you have to meet your financial goals, the more opportunities your investments have to recover from the periodic declines that inevitably affect investment markets. Many investors decide thatconservative investments are the way to counter the possibility of market declines. That can be a major mistake. Invariably, low investment risk canmean low returns that barely keep pace with inflation. With essentially nogains from investment growth, your progress is limited to the amounts you put into your account. That’s almost like using a shoe box to save foryour education and retirement needs. Instead of choosing onlyconservative investments, you should consider how much risk you can take with your investments and then choose a mix of securities designed to offer the highest potential return for the amount of risk you are comfortable with.

Mistake 3: Becoming Too Conservative After Retirement You are likely to live many years after you retire. IRS life expectancycharts add about 20 years to the typical retirement age of 65, but many individual investors choose to ignore this fact. When they retire, theyshift all their assets into cash equivalent investments, such as certificates of deposit and money market accounts. That can be the wronganswer for anyone who stops working. It can be a mistake, becauseconservative investments are not likely to grow as much as you need them to. Inflation, combined with drawing on your investment principal, mayerode your standard of living at the time when you should be enjoying it most. It’s much better to preserve an investment mix with growthpotential and gradually shift parts of your assets into more conservative investments as you are close to drawing on them.

Mistake 4: Believing Everything You Read The all-knowing publication or book on investments simply doesn’t exist.

The general information you read here is good advice, yes, but it is from a general perspective. Every individual’s investment situation, needs, andgoals are different. What is good for one person may not be good foranother. Your investments should be individually considered as part ofyour total financial and family situation. For more information, consultyour financial advisor.

(Alan S. Moore is a financial advisor in the New Orleans office of LeggMason Wood Walker, Inc., a diversified securities brokerage and financialservices firm that is a member of the New York Stock Exchange, Inc. AndSIPC.)

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