In 2010, You'll Get a Better Rate of Return by Pouring Your Money Down the Drain

I strongly believe that many of us don't take our money seriously. We spend more time and effort evaluating our cars and the pair of shoes we're going to buy than we do with where we put our money. Think about it. When we shop for shoes, you had best believe we're going to get our money's worth. We evaluate the quality of the materials the shoes are made of, how many outfits will match those shoes and how long we think the shoes will last.

But when it comes to investing our money we don't nearly undertake the due diligence necessary to ensure our investments will be fruitful. Because of our laissez faire approach with our finances, we would do better to simply pour our money down the drain. We may end up with a better rate of return.

Here are the 6 mistakes we make with our money:

1. We assume the "experts" know more. I'm amazed how many of us turn our money over to financial planners and investment advisors without understanding what they're doing with our money. Just like every teacher can't teach or every lawyer isn't good in court, don't assume that someone knows how best to invest your money. You should have a hands on approach with your money. Advisors are there to advise not decide. You should always be the decision maker. For me, I never let any financial advisor near my money unless they're willing to show me their tax returns. After all, if they didn't make more money investing their own money they certainly can't have mine! This is a rule I absolutely live by.

2. Failure to Automate. Companies have made investing so easy that it's surprising more of us don't automate. It only takes a few minutes to set up automatic investment accounts and many allow you to start investing with as little as $25 a month.

3. Lack of vision. We've all heard the saying don't work for money but make your money work for you. But how can it if you don't have a vision for want you want to do with your money. Your vision is the key to everything. It's your guide to how your money will work for you so if you don't have a vision for your money create one today.

4. Failure to Diversify and reassess your Portfolio. If you want to make your money work for you or do well financially, you must reassess your portfolio on at least an annual basis. I know many people put money in only stocks or bonds and never diversify. But the key to minimizing your risk is to diversify your holdings so that you aren't putting all your eggs in one basket. This way if the stock market crashes you weren't totally in stocks or if international stocks aren't doing well you can be balanced by your investment in domestic stocks.

Similarly, financial success requires reassessing your portfolio on an annual basis. Each year you should determine whether the allocation of your portfolio investment works for you or meets your needs. Time changes and so do circumstances and it becomes imperative that you're reassessing your portfolio to adapt to those changes.

5. Don't research. If I hear from one more person about a tip they got from a friend about a stock without researching it, I may just scream. I'm not saying that the friend isn't right about the stock but do your own research to determine whether this is something you should invest in. Remember a friend telling you about it isn't research. It's just a tip and before you act on it make sure you have the facts and know whether it's a good investment.

6. Only put your money in savings. Don't get me wrong, I'm glad to hear it when I learn that people are savers. The truth is America has long been a country of spenders and not have saved enough. But the truth is if you want to be financially independent you need to do more than save. You need to invest in something. It can be stocks, bonds, or a business. But you need to eventually invest because investing not savings will yield wealth more often and much quicker than merely saving.