last week from my report I covered Mistake #3 - Not having a systematic
formula to determine what type of funds to buy and how much of them to
Today I'll cover Mistake #4: Investing while looking in the rear view mirror (Investing in HOT FUNDS that have been making lots of $$$$$$).
If you learn nothing else from this report, PLEASE do not invest your portfolio in the "hot funds." Although hot funds are those which have done well in the most recent time frames (think Technology in 1999/2000), this is by far the easiest way to lose money in the market.
Dalbar reports that from 1982 to 2002, a period when the market averaged over 12.75%, the average investor only earned 3.5%. That is like paying an 8% load EVERY SINGLE YEAR! Why? Because investors buy high, sell low, chase returns, and invest in expensive products with high annual expenses.
Investors lose money by extrapolating some previous trend too far into the future (go read my report for specific examples). Want a good investment idea? AVOID every super-popular investment you find. This will keep your portfolio intact for the long term. Develop a strategy and stick with it.
Just remember too that as the market changes, your portfolio grows and time passes, often your investment goals and your tolerance for risk changes. When this happens you need to adjust your asset allocations accordingly.
That is why I offer a FREE Investment Analysis & Portfolio Review. It is a no-obligation assessment of your portfolio to see if you're still invested correctly for your goals, your risk tolerance and your portfolio size.
To get started on your analysis & review either reply to this email or call me here at the office at [aphone].
I hope you are enjoying the report! If you did not get a chance to read it yet here again is the link to download the PDF where you can open it: http://www.worst13mistakes.com/13mistakes-thanks.html
W. Edward Newton Jr., CFP
Newton Financial Network
13850 Ballantyne Corporate Place, Suite 500
Charlotte, NC 28277
Phone: (704) 552-8689