last week from my report I covered Mistake #4 -
Investing while looking in the rear view mirror (Investing in HOT FUNDS that
have been making lots of $$$$$$).
Today I'll cover Mistake #5: Overlapping Investments.
Ever wonder why you own 5 mutual funds, but your account either stays flat or goes down? One reason could be your investments are too correlated to one another. This means you can own 4-5 mutual funds, but the funds could be investing in the very same stocks.
One great example is Fidelity Magellan and the S&P 500 index fund. Did you know that over the past few years they were 98% the same – only Magellan was three times as expensive? If you held both funds, you received basically NO diversification. The point behind asset allocation is that by spreading the money in your portfolio around (we call it reducing standard deviation or variability of returns), some areas do well when others don't.
We have special software and tools which allow us to gauge the overlap of investments inside your account. Therefore we can make sure you are not doubling up on exposure to certain areas of the market. Often we will hear people complain about losing money with their investments.
Unfortunately, these people treat investing like a game, and do not take advantage of the time-tested techniques of preserving and protecting their wealth.
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