by Debbie Peterson
9 Investment Pitfalls for High Net-Worth Investors to Avoid in 2012
I
f you missed last month’s article and introduction, please refer to the August edition to read the first three investment pitfalls to
avoid. This is the second article in a 3 part series. Please watch for Part 3 in the October edition of Women With Know How, or download a copy at our website:
www.moneycounts.biz/news_events.html
Mistake #4: Taking Too Little Risk A portfolio containing too little risk can leave you feeling safe but sorry as your portfolio misses out on the important market rallies. With so much turbulence in the markets, many investors are flock- ing to so-called safe haven investments like U.S. Treasuries and cash. This aversion to risk can have serious adverse effects on long-term investments, as too many fixed-rate investments put a cap on your portfolio’s upside. Too little growth in your investments can leave you with a shortfall in your retirement years.
Mistake #5: Making Emotional
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Investment Decisions There are two emotions that you need to confront whenever you make finan- cial or investment decisions: fear and greed. Fear can cause us to abandon an investment strategy when the outcome is not what we want. Greed can cause us to chase investment fads and take on too much risk. It’s impossible to avoid feeling these emotions when making important financial decisions, however, you can recognize them and engage your rational mind to overcome them.
Mistake #6: Failing to Diversify The first step consists of diversifying be- tween asset classes. This means main- taining a good mix of stocks, bonds, cash, and perhaps some other types of alternative investments like real estate, or other investments that are a good fit for your goals and investor profile. The second part of a properly diversi- fied portfolio is diversifying within an asset class. One of the most criti- cal mistakes many working investors
financial
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