| It is common for investors to express uncertainty | | | | investment success. Overtrading also generates |
| over their ability to manage their portfolios during | | | | more transaction costs and fees that cut into |
| prolonged periods of market volatility. But prudent | | | | investment gains. One potential solution: work with |
| investors understand that making sound investment | | | | a financial advisor. An experienced professional may |
| decisions shouldn't be based on the market's twists | | | | be able to help you stay focused on your goals and |
| and turns. Rather, these decisions should stem from | | | | avoid the urge to trade frequently. In fact, studies |
| an understanding of investment fundamentals and | | | | have found that investors who work with a financial |
| an awareness of the mistakes others have made. | | | | advisor tend to hold on to their investments longer |
| Keeping a few common mistakes in mind - and steps | | | | and realize better returns than do-it-yourselfers. |
| to avoid them -may help you as you work toward | | | | Mistake #3: Failing to keep your balance |
| your goals. | | | | You might be surprised to find that strong - or weak |
| Mistake #1: Maintaining unrealistic expectations | | | | - returns in one area have caused a shift in your |
| There's nothing wrong with hoping for the best | | | | overall investment strategy that could affect your |
| from your investments - it's human nature. | | | | ability to reach goals or manage risk. Work with |
| However, you could encounter serious long-term cash | | | | your financial advisor to review your asset allocation |
| flow problems if you base financial plans for the | | | | once or twice a year to make sure that it remains |
| future on unrealistic assumptions. According to an | | | | in line with your investment objectives. |
| August 2004 Gallup poll, nearly one third of 800 | | | | Of course, investment mistakes do happen, but |
| investors surveyed expected to generate profits of | | | | many are avoidable. Learn from the missteps of |
| 10% or more in their portfolios during the next year. | | | | others, start applying these lessons to your |
| How does that anticipated return compare with | | | | investment strategy and make a point of working |
| actual historical returns? Based on data from | | | | with a qualified professional. |
| Standard & Poor's and the Federal Reserve, | | | | Leveraging Your Investments |
| from 1926 to 2003, a hypothetical portfolio divided | | | | One of the best vehicles for your money is real |
| equally among stocks, bonds and cash would have | | | | estate. In St. Louis, we are experiencing an average |
| had an average total return of 7.3% annually*. While | | | | return of 9 - 12%. Because there was not the fast |
| the composition of your portfolio may be different | | | | and explosive growth that other cities experienced, |
| from the portfolio in this example, it is important to | | | | the correction that the market is undergoing currently |
| maintain realistic expectations in order to have the | | | | will not be nearly as volatile and will provide a much |
| best chance at reaching your goals. Although past | | | | safer investment for home buyers. St. Louis real |
| performance is no guarantee of future results, | | | | estate can also be much more affordable that in |
| familiarize yourself with the historical performance | | | | other parts of the country because it enjoys a |
| of appropriate investment indexes -or appropriate | | | | relatively low cost of living. Many of the residents |
| benchmarks - and use their average long-term | | | | who have relocated to St. Louis have done so |
| returns to help maintain realistic expectations for | | | | because of the affordability factor. Because of this, |
| your own investment returns. | | | | St. Louis is poised to enjoy a steady and comfortable |
| Mistake #2: Chasing "hot" investments and | | | | growth over the next 20 years.Then the question |
| overtrading | | | | remains - what to look for and how to know what |
| Investors tend to convince themselves that recent | | | | to purchase. That is where you will need the |
| investment performance represents the future. The | | | | experience of a proven real estate professional who |
| problem with chasing today's winning stocks or | | | | knows the market, can demonstrate to you a |
| mutual funds is that by the time you hear about the | | | | proven track record of success. The real estate |
| latest "hot" performers, you may have already | | | | process can seem complex and daunting but working |
| missed out on all or most of the opportunity to | | | | with an experienced agent can make all the |
| participate in that price appreciation. Chasing past | | | | difference. Currently in St. Louis, the downtown |
| winners is closely correlated with another potential | | | | neighborhoods are turning over and experiencing a |
| investment mistake - overtrading. Shuffling your | | | | strong urban renewal. Neighborhoods to watch include |
| investments too often increases the chance you'll | | | | Benton Park, Tower Grove East, and Old North St. |
| buy high and sell low - a worst-case scenario for | | | | Louis. |