Six Money Mistakes That Could Cost You A Bundle

NEW YORK (MarketWatch) -- Here, from Consumer Reports, are six common mistakes that can each cost you $1,000,000 -- and advice on how to avoid them.

Investing too conservatively during retirement.
If you follow conventional wisdom and, as you approach retirement, shift money out of stocks into more stable investments you could miss many opportunities. Instead of parking too much of your assets in bonds, invest in an asset mix that leaves enough room for Standard & Poor's 500 stock index.

Launching a divorce war.
A full courtroom showdown can easily cost $250,000. Try to soften the financial impact by using a lower-cost mediation option.

Underinsuring your home.
If you've lived in the same house for at least 10 years, it's probably worth 50% to 100% more than you paid for it. But if you haven't updated your homeowners insurance, you could lose those gains if disaster strikes. Ask your insurer to reassess your home's replacement cost and adjust coverage accordingly.

Overpaying for your mortgage.
The annual percentage rates on mortgages in a given area can vary by close to a percentage point. Over a typical 30-year term, this can cost you $27,000 on a $299,000 home. Shop for the best mortgage rate by checking local banks, your credit union, big-lender Web sites and mortgage-related sites such as www.hsh.com.

Maintaining an unhealthy lifestyle.
Bad health habits not only catch up with you as you age but they can also hit you in the pocketbook in the form of higher life-insurance premiums. Before you apply for life insurance, consult your doctor about the best way to get your health status in line with the "preferred plus" underwriting requirements. Insurers are OK with you taking medications to achieve normal blood pressure and cholesterol levels.

Paying needless fund fees.
If you buy mutual funds from a broker, you could pay a commission, or "load," of up to 5.75%. Annual expenses can also vary among funds, from 1.5% or more a year to as little as 0.1%. Fix: Choose no-load mutual funds with low expense ratios. You can buy them directly from investment companies such as Fidelity, T. Rowe Price, and Vanguard.

By Marshall Loeb