I joined Barron’s editor Jack Otter on “Money With Melissa Francis” on Fox Business Network last week to talk about investing mistakes. The spot hit on some important points that everyone should be aware of right now:
Don’t get greedy: If you’re not in this stock market rally yet, getting greedy with your investing strategy could be hazardous to your bank account. It’s best to take a long-term view by averaging and not chasing short-term performance. Jack advocates setting a firm asset allocation and sticking with it, while I’m a bit more of a tinkerer and think there’s nothing wrong with making a few sector bets. But whatever your strategy is, stick with it and don’t chase performance … because the gains since the 2009 lows are long gone and unlikely to be repeated.
Skip whole life insurance: Jack points out that for the vast majority of Americans, term life insurance is plenty. Whole life insurance, which has started to pick up in popularity recently, combines a policy payout with an investment component and is typically much more expensive — and sometimes doesn’t produce bigger distributions to your beneficiary.
Watch housing: Given the run-up in home prices, you may think real estate is a great investment right now. But don’t believe it. When the current low-interest rate environment ends it could push many prospective buyers out of the market. Furthermore, many distressed regions like Las Vegas and Orlando are seeing over 50% of transactions as all cash — a sure sign speculators are on the prowl. If you’re buying a house to live in, that’s one thing … but be careful about chasing returns in real estate. That’s how we got in this mess several years ago.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at email@example.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.