You bet it’s an exciting time to be a fixed-income investor. But I’ve been telling you that for years. You don’t have to compound big numbers to be a successful fixed-income investor. You need to harness time and let the magic of compound interest do the heavy lifting.
What never fails to amaze Your Survival Guy is how the average investor always wants more, more, more. When rates are at levels you can sink your teeth into with some peace of mind and comfort—look at treasuries—they reach for yields that are double that with terrible credit ratings. Good luck. Because it’s in times like these when things still look okay, but it’s getting foggy. Will interest still be paid, and if so, for how long? Look at this yield curve. It’s a cornucopia of opportunity. But don’t get greedy. Avoid investing mistake #10.
Investing Mistakes to Avoid: #10 Picked Off First
Your Survival Guy has compiled a list of investing mistakes to avoid. It’s a list for highly successful, fairly wealthy investors. Today’s lesson is what I refer to as “Picked off first.” Do not get picked off first base.
When you have some money, or in my example, get a hit, you need to protect yourself. You can’t afford to be picked off and sent to the dugout. But it happens with far too much frequency because investors are caught sleeping.
Here’s what I’m talking about. One of the first things you learn about investing in bonds is the risk-free rate of return. You can see it below. That’s gravity or Dick Young’s North Star. It’s your lay of the land.
Time and time again, investors risk their precious principal to get that extra percentage point. It makes no sense to Your Survival Guy, whose focus is to keep what you make. They’ll put $100,000 in something that pays a measly extra point to get $1,000 bucks and risk the principal.
This is the habit of the investor with a spending problem. He daydreams about his needs. Then disaster strikes. Do not be a needy investor. Start by saving ’til it hurts. Don’t get picked off first.
Action Line: I’ll be in your ear to help keep you focused. I’m here to help.
Read every one of the Investing Mistakes to Avoid here.
E.J. Smith - Your Survival Guy
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