Tags: Edelman | investment | strategies | funds

Financial Adviser Edelman: Investment Strategies to Avoid

By    |   Wednesday, 24 September 2014 11:33 AM

Interest rates have hovered at or near record lows for six years and are likely to continue doing so for at least another six months.

While this situation has caused many investors to venture far out on the risk curve to achieve a decent return, many may be unaware of the dangers posed by some of their investments.

Ric Edelman, CEO of Edelman Financial Services, cites 15 strategies and investment products to avoid in a guest commentary for CNBC. These include:
  • Variable life insurance policies
  • Non-traded real estate investment trusts
  • Hedge funds
  • Commodities
  • Derivatives
  • Viatical settlements, which entail buying insurance on someone else's life
  • Master limited partnerships investing in oil and gas
  • Fixed annuities
  • Equity-indexed annuities
  • Actively managed mutual funds
He also recommends staying away from retail mutual funds in favor of exchange-traded funds and institutional-grade mutual funds, which have lower costs.

So what should you adopt as your investment principles as you seek bountiful returns with a high degree of safety?

"Extensive, global diversification; a long-term perspective; and strategic re-balancing," Edelman writes.

Meanwhile, Motley Fool columnist Morgan Housel, writing in The Wall Street Journal, identifies three common investment mistakes.
  1. "Incorrectly predicting your future emotions. Too many investors are confident they will be greedy when others are fearful," he explains. However, no one believes they will be the fearful ones.
  2. "Failing to realize how common volatility is." One important point to remember is that market corrections occur frequently.
  3. "Trying to forecast what stocks will do next." Former Federal Reserve Chairman Alan Greenspan has pointed out that "We really can't forecast all that well, and yet we pretend that we can."

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Interest rates have hovered at or near record lows for six years and are likely to continue doing so for at least another six months.
Edelman, investment, strategies, funds
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2014-33-24
Wednesday, 24 September 2014 11:33 AM
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