Financial Literacy - Financial tuneup
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Top 10 investing blunders

9. Ignoring your portfolio

Buy and hold can be a smart strategy, but buy and ignore won't serve you in the long run.

"I've had new clients walk in with statements in a box and they haven't even opened their statements," laments Shah.

Without reviewing your holdings, you won't know if your portfolio remains balanced, and you won't shift your holdings to achieve new goals or help you cope with changing life events.

The experts differ on how often you need to do a portfolio review. Shah recommends doing so on a quarterly or semiannual basis. Salmen meets three times a year with his clients. But all agree that it's important to review your holdings at least once a year, whether they're within a company-sponsored retirement plan or outside of one.

"Perhaps you're invested 80 percent right now in equities, and realize 'I need to think in five years now instead of 10 because I want a vacation home' or 'I got laid off.' If you're looking at your investments regularly, you can shift to fit your circumstances," says Pallaria.

Find out how to use investments to reach your goals.

10. Getting emotional

The market is ricocheting all over the place, and when the boss isn't paying attention, you're online buying and selling in a frenzied attempt to dodge the bullets.

"Emotion, both greed and fear, drive more of the decisions than anything else," says Salmen.

He describes the all-too-common trap emotionally driven investors fall into: "Most people don't earn what the market earns. They invest too heavily in too risky investments that are doing well, then drop out when they go back down. They take all their money out of tech stocks, for example, put the money into bonds, then put money back in stocks after prices have gone back up."

His prescription is to invest a little bit of money from every paycheck, diversify, then leave it alone.

Pallaria recommends taking yourself out of the equation as much as possible. "The best thing that people can do to make it easy on themselves is to automate investing as much as possible. Have the money automatically taken out each month or each quarter. That's absolutely the best way," he says.

Called "dollar-cost averaging," this autopilot strategy enables you to buy more shares when the market is down -- and that's the whole idea behind buying low.


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