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6 Big Money Bloopers To Avoid

January 16, 2011

My Mom was a Nun when she met my Dad, years ago in NYC. Dad likes to say how he wooed the “habit” off her. And eventually she left the order and married Dad (only because she had to, if you know what I mean, wink wink). She was a very positive person in spite of her chain-smoking, wine-in-box, catholic guilt issues. She always told us to look at the silver lining in everything. As we look at the economy these last few years, let’s take a look at some lessons to take away from the market’s ups and downs.

  1. Following the herd. To avoid the common outcome of buying high and selling low, put your investments on autopilot by setting up asset allocations and making regular investments at set intervals.
  2. Running for safety. Playing it safe might make sense if you don’t have a long time horizon and can’t wait for the market to recover. But if you’re younger, you could be making a costly mistake.
  3. Making unrealistic return projections. Don’t make assumptions based on 9 to 10 percent annual returns in the S&P. Instead, keep investing in your retirement account, but adjust your expectations in light of recent events.
  4. Counting on your home as an investment. It may be your biggest asset but you shouldn’t expect to make much money from it and don’t base any assumptions of your ability to retire on how much your home might appreciate.
  5. Not harvesting losses. “Stay the course” is the mantra of many investment advisers, and we generally agree. But there are times when it makes sense to sell. For example, selling losing stocks can help you cut your taxes in that year.
  6. Not focusing on when you’ll need your money. Don’t put money you’ll need within the next five years in the stock market.

 “Good stuff” Mom would say. At GAI (gunwel.com) we can assist you in making financial choices that are necessary for everyday life. Give us a call at 212-979-6830 or stop by for a visit as we are ready to help!

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