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Building a sizableretirement nest eggis anything but automatic.
While thats a tax-free transaction, the problem for many investors is that the money is transferred as cash.
While that might not seem like a problem, heres why it is.
Then, your IRA will receive cash only.
The problem arises when investors are unaware of this standard operating procedure.
Meanwhile, your money will be sitting in cash, earning extremely low returns.
But the $130,000 that Vanguard suggests investors could lose could be understated.
Heres the math behind the omission in black and white.
Imagine that you have a retirement account worth $250,000 and you keep it in cash for 10 years.
That amounts to a loss of about $415,000 in just a single decade.
If youre thinking this is a rare occurrence, youd be wrong.
Even the typical account holder still waited a full nine months to reinvest their funds.
How To Avoid This Simple Yet Common Error
In many cases, investment mistakes can be fixed.
If your asset allocation is off, you might increase or decrease your risk going forward.
But the good news is that theres a simple fix for this error.
If you check your account statements regularly, you might avoid this unfortunate situation.
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