Forbes.com

In these perilous financial times, it's not enough simply to salt away money for retirement. You have to keep on top of things and not make investment mistakes that can erode or even decimate your accumulation. Here are pitfalls to avoid.

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1. Having no diversification

Putting it all in too few securities or in just one asset class (all in stocks or all bonds, or all dot.com) puts your investment at risk if something really bad happens in your area of concentration. It's much safer to spread it around.

2. Putting it all in one stock

Even if it’s the company that employed you, this is the worst form of nondiversification. It’s not justifiable. Remember ABC Learning? Babcock & Brown? And just this week Gunns? It’s a long list.

3. Ignoring inflation

Unless you expect to die quickly after you stop working, you can’t ignore what inflation will do to a portfolio made up overwhelmingly of cash and fixed income. Make sure there’s a hefty stock component.

4. Buying stocks after unverified tips

Be they from a neighbour, business associate, a cabbie or the Internet, stock tips should be ignored unless you or an advisor conducts some serious research. “Hot” tips have a way of not panning out.

5. Ignoring investment expenses

They’re not quite a cancer. But excessive investment expenses and fees can eat away at your nest egg and over time do substantial damage. Pay attention to their level.

6. Trying to time markets

So you think you know how to get into the market at the bottom and sell at the top. Sure you do. What’s more likely is that you will miss upward swings and get stuck with losers.

7. Taking on too much risk

This usually consists of a portfolio overwhelmingly full of stocks. Stocks are a hedge against inflation, but only in moderation.

8. Taking too little risk

If your retirement portfolio consists almost exclusively of fixed income and cash, you’ll sleep well today not worrying about the stock market. But you’ll probably outline your money, which is not a good thing and will give you sleepless nights in the future.

9. Investing with borrowed money

Adding leverage to a portfolio - borrowing money to invest - tremendously increases risk. It is not suitable for most investors planning for retirement. 

10. Ignoring tax implications

The taxman has a habit of getting you no matter what you do, ensure you get tax advice so that you minimise the chunk that goes his way.

11. Engaging in day-trading

Repeatedly moving in and out of stock positions on the same day is profoundly inconsistent with a measured long-term strategy. It is also beyond the competency of most investors to do profitably over the long run.

12. Overestimating your investing acumen

Experts in behavioural finance say a false belief in one’s ability to skillfully manage investment is a real threat. Such arrogance can lead to bad decisions.

13. Not considering all your assets

Future Social Security and other goverment medical payments are assets. So is a pension. Failure to take these into account when planning the future might result in more investment risk-taking than necessary.

14. Making rash investment decisions

When faced with the prospect of not having enough for retirement, some people decide that the best option is to make money quickly by taking on risk. It's not.

15. Not vetting your investment advisor

Even if not a crook, a bad investment advisor can cost you a lot of money. Thanks to regulators and the Internet, it’s never been easier to checking out your hired financial help.

16. Riding winners

There’s a natural instinct to automatically hold onto investments that are doing well, in the hope they will do even better. Investing experts say this tendency increases the chance you will get caught looking when an investment turns south.

17. Paying insufficient attention

Whether before or after retirement, an investment portfolio requires regular attention and monitoring. A “set-and-sleep strategy” is not optimum.

18. Cost averaging in a mindless way

Adding to investments you own when they’re down in value can be a valid strategy - but only if you understand why they’re down in the first place. Otherwise, you might simply be holding onto losers.

19. Chasing past performance

Adding to investments you own when they’re down in value can be a valid strategy - but only if you understand why they’re down in the first place. Otherwise, you might simply be holding onto losers.

20. Forgetting investment entails risk

Unless you’re willing as an investor to settle for a bank term deposit rate of return, you have to take some risk. There’s nothing wrong with that. The trick is make sure you understand and manage the risk.