You've got many of your financial ducks in a row, right? You've got an IRA set up, helping you grow a nest egg for retirement -- right?
What's that? You don't? Well, if you're afraid you're being kind of dumb, I'm going to have to agree with you. Unless your retirement is otherwise taken care of, perhaps by a generous pension or lucky inheritance, you need to look into setting up IRAs and 401(k)s and the like. (Learn how you can open an IRA and why should want to in our IRA Center.)
Now that I've perhaps insulted you, let me try to make amends -- no matter how dumb you've been, there's still time to take action to improve your financial future, and there's always going to be someone even dumber than you. (Unless you're the former treasurer of Alcona County, Mich., that is.)
True story: That unfortunate soul seems to have fallen for the now-notorious Nigerian banking scam. He allegedly responded to spam e-mails offering him gobs of money in return for a comparatively small investment of his own. It's further alleged that he sent more than $70,000 of his own money to overseas accounts -- and more than $180,000 of county money that he embezzled. There are suggestions that he might have bilked the county for even more than that.
It's amazing enough that people are still falling for these scams, but it's especially amazing when the sucker turns out to be a financial professional whose bank even tried to alert him and stop a transfer of funds. It makes you shake your head even more to think that he would even embezzle public funds for this purpose.
How it happens
Truth be told, I have an inkling about how and why this happens. We homo sapiens aren't always rational about money, as my colleague Robert Brokamp explained in "Are You A Homo Moronicus?" We don't always think clearly, and sometimes we let our emotions override our senses. I think this treasurer might have become so convinced of the big bucks awaiting him that he couldn't help but act. If so, he didn't seem to appreciate the possible downsides.
This underscores why we need to be socking away money for tomorrow; after all, not everything you're "sure" of will pan out. Big bucks from Nigeria? Not likely. Big bucks from your pension? Well, many pensions have run into troubles. Social Security? Let's sit tight and wait for that one.
Even stocks we think we can count on can let us down, which is why it's important to stay diversified. Think of Webvan, now defunct. The much more successful Cisco Systems (Nasdaq: CSCO) is currently trading at little more than half its price from seven years ago, and Verizon (NYSE: VZ) also remains below that benchmark. Enter the traditional blue chip realm, and companies such as Eastman Kodak (NYSE: EK), which have been around for eons, aren't looking too healthy anymore. (That said, Bill Miller recently held lots of shares of Kodak in his famous Legg Mason Value Trust (FUND: LMVTX) fund.)
So get those financial ducks in a row. Start an IRA, if you haven't already, and contribute to it. And diversify, at least a little. If nothing else, it might help you feel a little less dumb about your finances.
Get much more guidance on retirement planning, including dealing with inflation, in our Rule Your Retirement newsletter. You can try it for free for a whole month, accessing all past issues in full.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.
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