Invest your money wisely

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Can we afford to make mistakes in this financial environment? In attending many networking functions, I have spoken with Queens’ financial advisors and listened to their input and experience.

Underestimating the time horizon for assets is a mistake you can make. Someone born in 1952 has a life expectancy of about 69 years; in 2006, 78 years.

Not having a clear investment objective can also be a mistake. People invest their money without any strategy, which leads their portfolios to ruin.

Gamble on high−risk stuff when you are younger and starting out. As you get older, many people want to see bigger returns instead of investment singles. You must have a well−diversified investment portfolio to show a profit.

Confusing income needs with cash flow needs seems to be a common mistake. Income and cash flow are not the same thing. Cash flow is how much money you need for living expenses and personal needs. Income is the amount of dividends and interest earned by a portfolio that, in the case of a taxable account, you will pay current income taxes on.

The way you generate income can affect asset growth and the taxes you pay. These factors will have an impact on your ability to generate cash flow. It is a mistake to think you should get the cash flow you need solely from your portfolio income without touching the principal.

Avoid investing in foreign securities. The United States represents less than 50 percent of the developed global equity market.

Also, do not be overconfident in your own investing skills and do not invest based on known information. Investing on known information falls into my category of “they said it” and “everybody is doing it.”

So How’s Business regarding investment mistakes? Use common sense when making investment decisions and ask the pros for advice — they are pros for a reason.

Reach Joe Palumbo at 516−248−0256 or

Updated 6:40 pm, October 10, 2011
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