David John Marotta was interviewed on radio 1070 WINA’s Schilling Show on 3/8/2016 discussing three big investing mistakes.
Listen to the show here:
- An Investment: something that pays you money, that goes up on average.
- A Mistake: something about which you should have known better ahead of time. If something that is a good idea happens to go down, that is unfortunate, not a mistake.
(1) Investing Mistake #1: Thinking Gold is a “Safe Haven”
I’ve run the numbers using data from FactSet, and if you’ve bought gold bullion at any time since it began trading freely in 1975, you’ve lost money over the following 12 months about 45% of the time. That’s right: Nearly half the time, gold has fallen in price year-on-year.
– Brett Arends of Market Watch
Read more at “Why Gold Has Utterly Failed as a ‘Safe Haven’”
(2) Investing Mistake #2: Forgetting About Inflation
One of the most common financial mistakes is to forget about inflation. My grandmother, Florence Mortlock, was born in 1904. At the time, you could buy a dozen eggs for a quarter and a week’s worth of groceries for a few dollars.
Had you told her that she would need hundreds of thousands of dollars in order to fund her retirement, she would not have believed you. She would have thought that if she managed to save $5,000 it would be a princely sum of money.
Read more at “Investing Mistake: Forgetting About Inflation”
(3) Investing Mistake #3: Thinking that you can safely spend dividends and interest
Calculating safe spending rates in retirement is challenging. Everyone wants to be conservative and be sure they will have enough money. But understanding what numbers to use is not simple.
The most common request we get is for a back-of-the-napkin calculation of future yield, interest or income. People assume they can safely spend the income and thus refrain from touching the principal. But rather than being conservative, this strategy may actually lead people to spend too much.
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