What are the key mistakes people make when planning for long-term financial goals?

In order of how much they can hurt you, these are the biggest financial mistakes you can make in long-term planning (biggest onwards) –

1. You forgot to start early.
Compounding your gains and savings is most effective when given time, and once you lose time you never get it back. Starting small early has a much bigger impact than starting big, late.

2. You forgot inflation.
Simply saving – and not investing – gives you a nice little lump sum each year… which then shrinks every year. Never just save money and leave it in the bank.

3. You forgot taxes.
The returns from any investment are always returns minus fees minus taxes. A taxable investment at 10% may be worse than a tax-free investment at 8%.

4. You didn’t have any plan.
Think of what money you will need, when and for what. Prepare in advance. Set targets. Otherwise you will always be flailing around reeling from shock to disaster to catastrophe, frantically using up savings for the wrong things. Factor in life stages, emergencies, unexpected shocks.

5. You didn’t re-evaluate your plan.
Life changes and your plan needs to change with it. The plan you had at age 25, you will laugh at it at age 35. If you hadn’t periodically reviewed your plans, you will cry instead.

6. You didn’t diversify.
Even if you did everything right, all investments move in their own cycles. If you put everything in one investment / category / sector, you better pray the stars align and your investment is at it’s peak on that future target date – else you’re screwed.

7. You didn’t take care of your health.
Sure, you made the perfect plan, worked hard, saved diligently, invested wisely, and amassed a massive fortune by the age of 55. Only one problem. You’re lying in the ICU with your 3rd lifestyle-related heart attack and will probably be dead in a year, a year spent lying in bed and watching your children fight murderously over everything you built.

So that’s it – some of the more common ways in which it can all fall apart. The good news is, it’s all foreseeable, all preventable.
Read my book ‘Bad With Money’ – it talks about exactly this.
https://amzn.to/3ZNNXKT