http://www.wassermanwealth.com/wp-content/uploads/2013/09/WWMnewweblogo.png 0 0 Brad Wasserman http://www.wassermanwealth.com/wp-content/uploads/2013/09/WWMnewweblogo.png Brad Wasserman2015-10-23 09:56:022015-10-23 09:56:02Financially "scary" things you should avoid
- Market timing. It does not work. You cannot be consistently right in trying to get in and out of the stock market and predict the highs and lows.
- Junk Bonds. The additional interest that low quality bonds pay are not worth the additional risk, as there is a much greater chance of not getting your principal back. These are also know as “high yield bonds.”
- Hedge funds. In general, they do not outperform assets class mutual funds, especially after considering their very high internal costs, high turnover rates which cause higher taxes and illiquidity. They have not proven to be worth the risk, even though they are marketed to reduce risk.
- Municipal bonds which are all from one state. Diversification is very important, even in fixed income investing. You should own bonds from many states, not just your state of residency to avoid state income taxes. If you only own bonds from one state, the risk of default is more concentrated.
- Mutual funds or money managers that do not equal or outperform their respective benchmark or peers. Why invest in a mutual fund that is underperforming? You need to review this over time, to see if your investments, funds or money managers are underperforming. We can assist you with this, if you would like.
- Mutual funds or investments which are all in one asset class, usually US large companies. You will have a more successful long term investment experience by being globally diversified, which means owning many assets classes, such as US small value, International Value, Emerging Markets and Real Estate.
- Owning investments which generate high taxes in your taxable accounts. We can reduce our clients’ taxes by focusing on where certain investments are held (in a taxable or retirement account).