September 2, 2009

The Danger in Rushing to Safe Investments

Chad Smith

Safe InvestmentsI don’t think it’s a reach to say most of us would feel safe if Mr. Neeson had our back.  His “particular set of skills” speech in Taken could make anyone fell a little safer.

Back in March, many investors wrestled with the emotions of wanting to preserve whatever money they still had by moving to safe investments.

Generally, this thought process involved convincing themselves that cash or CD’s were safer investments than stocks.

How Safe Investments Can Hurt

Using a little hindsight, those decisions to move into “safer” investments, don’t seem as appealing after a 50% increase in the S&P 500 index since then.

This type of behavior is a classic example of the typical mistakes that investors make at turning points within the markets.

In a recent Wall Street Journal article, “Playing it Safe Can Hurt Returns,” you can see examples of how impulsive moves to safe investments can negatively influence your investments.

Photo Credit: Houang Stephane

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September 2, 2009

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Chad Smith is a Certified Financial Planner™. He is an active member of NAPFA, the Financial Planning Association, and FPA’s NexGen. He has been quoted and appeared on WSJ.com, Bloomberg.com, Businessweek.com, Msn.com, Financial Planning Magazine, Triangle Business Journal, and Investment News.

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