When it comes to investing, emotions often lead consumers astray, especially during times of heightened financial insecurity, like the recent recession. Everyone panicked a little during the financial crisis, but the 1.6% of pre-retirees who abandoned equities altogether lost out big.
Pre-retirees (age 55 or older) who dropped stocks from their 401(k) by the first quarter of 2009 and never rebalanced have seen their balances grow by only 25.9% through the first quarter of 2013, according to a new report from Fidelity. Their average balance rose during this period from $80,200 to $101,000.
Our tip: There's no such thing as a sure thing when it comes to investing, which is why you're better off leaving the day trading to the professionals. There's far more to be gained by simply investing in a low-cost index fund that tracks the market and letting nature take its course, so to speak. That doesn't mean you shouldn't consult a professional adviser or planner from time to time or rejigger your investments as your life situation changes, but if you react to every ebb and flow of the market or listen to market gurus on cable TV, you'll only be setting yourself up to lose down the road.
Reddit tip: "The stock market is not a zero-sum game, and it is impossible to determine when it is going to fall back."