Is there a way around this for landlords?

The secret of good investment practice is a strategy that aims to spread an investor’s risks. This means holding a range of investments in different sectors. The theory being that when one investment is doing poorly others will be showing good returns and therefore overall the investors ‘pot’ will keep on growing.

For a buy-to-let property investor diversifying their investment portfolio may seem to be problematic if not impossible. A landlord and property investor does not always want to buy another residential investment property in another part of the country in order to diversify the geographical spread of their residential investment portfolio and thereby reduce their risks to a fall in residential property prices in one part of the country because of the very practical difficulties of having to remotely manage a buy-to-let investment property. Also by buying another residential investment property a landlord is buying an investment in the same asset class. This is not really diversifying an investor’s portfolio and therefore reducing the risk to the landlord of their investment performing badly.

What a landlord and property investor really needs to do is to use their residential property asset as an investment vehicle to finance a portfolio of diversified investments thereby providing a landlord with their own diversified investment pot.

FOR EXAMPLE

Jim Smith’s 2 bed terrace house in York

Jim has a buy-to-let investment property in York worth £200,000.

The annual rental income is £12,000 which gives the residential investment property a gross yield of 6%. Therefore as it stands Jim is 100% invested in UK residential property and specifically in this case in the York housing market.

To finance this residential investment property Jim has taken out a £100,000 repayment buy-to-let mortgage over 25years on which he is paying 6%. This costs £644.30 per month in repayments on his buy-to-let investment mortgage. Repayment of the mortgage leaves Jim with a net income after paying his mortgage of £355.70 (in reality this will be eaten into by other expenses).

Jim therefore has equity of £100,000 in this residential investment property. Now say house prices fall over the next five years by 10%. This means the value of Jim’s property drops to £180,000 thereby reducing his equity to £80,000.

How can landlords reduce their investment risk

Jim is keen to reduce his risk of sustaining a fall in the value of his investments. This is best achieved by following a strategy of diversification. This is how it is done.

He increases his borrowing to £150,000 through a further advance of £50,000 on an interest only basis. Again the interest rate payable is 6%. This makes a total payment of £644.30 pm plus the interest only payments on the further advance of £250 pm. In total this amounts to £894.30 pm which is still covered by the £1000 rent. It is worth mentioning that rents are likely to rise over time whilst the repayment part of the mortgage will start to fall.

Investment diversification

Here is the clever part. The £50,000 of the additional loan should then be invested in high yielding shares and funds. In the current climate it is easy to find funds & shares that pay dividends with a 6% yield.

By doing this Jim has immediately diversified his investment from 100% in UK residential to 80% residential: 20% shares & funds and according to Portfolio Theory immediately reduces his risk of sustaining an overall loss.

For example the share portfolio that Jim has invested in does reasonably well and rises by £20,000 or 40% over the 5 years. The result being that this cancels out the loss of equity sustained by his residential property.

The ‘win win’ scenario is obviously that both the values of his shares investments and his residential investment property continues to rise.

Risks

The risks to Jim of this investment strategy is that his share portfolio does badly; however careful stock selection and in sectors away from the UK should mean that if the UK economy goes into a slump other markets will be doing well.

The other risk of this strategy for Jim is that mortgage rates rise meaning his increased borrowing costs exceed his rent. Hawkeye can hedge against this by fixing the interest rate payable on all or part of his buy-to-let mortgage for the period.

This strategy is not for the faint hearted landlord. However, for landlords who are comfortable with managing their own financial affairs and want a way to reduce their exposure to the UK residential investment market it offers a solution to a real investment conundrum faced by landlords of how to reduce the risks of a landlord sustaining a loss as a result of a falling or stagnating residential investment market.

Final words

What a landlord needs to do is go beyond thinking just of their individual residential investment property as an investment but to see it as almost an investment vehicle with which to create a diversified selection of investments with which to achieve a landlord’s individual financial goals. By using the undoubted income generating capacity and excellent long-term capital appreciation prospects landlords can then create their own diversified specialist investment vehicle.

Chris Horne is an experienced landlord and property professional who now runs the website Property Hawk, a site aimed directly at UK Landlords. The site incorporates free property management software that enables landlords to track all their financial data relating to their portfolio. It allows users to print tenancy agreements and other forms FREE FOREVER. The site generates a real time rent book for each property as well as calculating a landlords tax liability. The service is totally free to use at propertyhawk.co.uk

There is of course the question of what will happen in 2006 and the UK property market and in particular with investment property. It is never a precise prediction as there can be many influencing factors but what we do know for certain is that over the last few months we have seen interest rates stabilize and property pricing stablising as a result of this.

UK Investment Property

So does that mean we should avoid investing in UK investment property until the market starts to increase again. In some respects many people might suggest that investing in UK property at any time is a good investment. When you consider that historically property has doubled in value, and sometimes tripled in value, every last 10-15 years, then it is likely to see you a good return on your UK investment property if you are prepared to take a long term view. Plus, there still remains a high level of activity from Landlords and investors alike with a number of buy to let mortgage providers suggesting record levels of applications being received. For those looking for a get rich quick overnight scheme, then this is not for you. But when you consider the long term gains associated with the UK investment property market, it might be worth reading on and don’t forget that it is worth doing plenty of research and finding out as much as you can about investing in property in the UK. Perhaps pick up a Free Buy to Let Guide.

How to make £166,500 in 15 years

According to research from the Centre for Economics and Business Research (CEBR), the average cost of a home in the could be £300,000 by the year 2020. Currently that figure stands at around £157,000 in 2005 which represents an increase over the next 15 years of 91%.

This figure of £300,000 is achieved by the economic forecaster basing its prediction on the ever increasing population compared to a slower production of house building. As with many commodities, it is the result of lower supply and higher demand that will push up these prices.

With buy to let residential UK investment property, the maximum loan you can apply for is 85%. Based on an average value property in 2005 of £157,000 this would require you to put down a deposit of 15% £23,550 subject to valuation and rental cover which can vary between 115% to 130% in most cases.

Potentially over the next 15 years, this one investment could realize a return of £166,550. This is based on selling the investment property at £300,000 less the loan of 85% of the property value in 2005.

Over previous years there have been times when property has declined in value and other times where it has signifcantly increased in value but a good property investor will clearly see the benefits in both a rising and declining market and will utilize the facilities of a good buy to let mortgage provider to assist in this. Some also offer Free buy to let mortgage quotes.

During a rising market, a property investor may decide to use this window of opportunity to release some of that equity realized in the value of the UK investment property, to use for additional property investment. However, the property investor is less likely to use that capital released during a rising market. Instead, the landlord will wait until the market has re-stablised itself or experiencing a decline. At this point, they will then use this window of opportunity to purchase lower priced investment property and the circle continues. That is why property investors are in it for the long term and why they see the UK investment property market as being profitable to them in all conditions. And when you consider that UK property prices only need to increase by an average of 4.4% year on year, it is easy to see why this type of property investment is so achievable.

Successful property investors will do a lot of research on areas that they believe will become investment property hotspots and areas which are less likely to perform. There are many areas experiencing high levels of growth and financial investment with a lot of regeneration programmes in place or planned in the future. Even by simply monitoring publications such as Construction News can give a good indication of where new commercial premises are being built which can be a good indicator of new businesses moving to the area which it turn can lead to an increase in demand for rental property locally.

It is the general consensus that interest rates have stablised and there is even speculation of a drop but either way, they have been steady for a good number of months now. Slower capital growth does result in buyers having to put more effort into managing and developing their UK investment property portfolios. And more importantly making a profit from investment property. Buying property at discounted prices can be done but you must do your homework to make sure they are genuine discounts and incentives. And don’t forget that in a slowing market, vendors will be more likely to listen to your offers. Albeit if they are a bit cheeky. In particular, you can use the negative press that is often surrounded by the property market to your advantage. For example when the media are circulating stories of a dropping property market, then vendors are even more keen to listen to your offers.

How to Get Started in Buy to Let

Do as much research as you can. You can even get some free publications including Free Buy to Let Guides.

Find out what properties are selling for. A good way of doing this is by contacting estate agents and researching on the internet. A good way is to look at property house price websites.

What is the level of demand for rental properties in the area

What type of property is most in demand. For example, if it is a university city , then the demand for shared student accommodation may be much higher than property for professional sharers.

Find out what rent is being achieved on those properties and the likely time to get the property let out. Speak to letting agents and local businesses that may be letting properties already in the area.

Raising deposits for your investment properties, may be easier than you think by releasing equity from any of your existing properties.

So how Do you know if you have bought a good UK investment property

Well there is always an element of risk but providing you follow the main logic you should eliminate most of them. It is also important to make sure you continue to review your buy to let mortgage funding on a regular basis as this can have a big impact on your success and cash flow. As we have said above, the UK investment property market can rise as well as fall so providing that you have some cash funds in the bank to help you through any tougher market conditions then you could reap the rewards in years to come. But it’s important that you calculate these carefully into your projections to ensure that whatever funding you may need to input into the investment property that it will be outweighed by the eventual gain.

Providing that you are buying a good quality investmnt property in a good area with strong rental demand then it’s worth considering. Don’t just buy an investment property because it is cheap. You might buy a property at a very discounted price, but if you can’t let it, you could find yourself covering the buy to let mortgage payments for months to come which will see a big dent in your profits. Find out why it is cheap. Is there an increase in crime in the area, have plans been submitted for a large industrial unit to be built behind the garden etc, etc. Do your research. And don’t be afraid to develop an investment property for profit. Buying at the right price, in the right area and doing the right renovation on the property, can also see you return a decent profit. Re-financing the investment property on completion and letting it out could give you the best of both worlds.

Having taken into account all the considerations above, to calculate if it is a good investment property, you need to ensure that your annual rental income exceeds the cost of your monthly buy to let mortgage repayments and maintenance costs. And it is more likely that your annual rental income will be stronger if you select an investment property in area with a strong and growing rental demand as it is less likely that you will experience rental voids and be supplementing the monthly buy to let repayments.

So in conclusion the UK investment property market is likely to remain a prime choice for property investors as long as they are will to commit to the long term.

Jennifer Tweed is the founder of buytolet4sale.com, one of the UK’s first investment property portals dedicated to all types of investment property for sale and everything you should need for buy to let
.

Real estate investing is really an art and, like any art, it takes time to master the art of real estate investing. The key, of course, is to buy at a lower price and sell at higher price and make a profit even after paying all the costs involved in the two (buy/sell) transactions.

Generally, people are of the opinion that real estate investing makes sense only when the rates are on the rise. However, real estate investing for profits is possible just about any time (and as I just said, real estate investing is an art). Here is a list of tricks that can make real estate investing profitable for you:

1) Look for public auctions, divorce settlements and foreclosures (bank/FHA/VA): Since quick settlement is the preference here (and not price), you might get a property at a price that is much lower than the prevailing market rate. You can then make arrangements to sell it at the market rate over a short period of time. However, make sure that the property is worth the price you are paying.

2) Looking for old listings: The old listings that are still unsold may provide you with good real estate investing opportunities. Just get hold of an old newspaper and call up the sellers. They might have given up hope of selling that property at all and with a bit of negotiation you can get the property for a real low price.

3) The hidden treasure: A really old (and dirty) looking house may scare off buyers. But this might be your chance for real estate investing that can yield good profits. So, explore such properties and check if spending a bit on them can make them shine. You can get these at very low prices and make a big profit in a short time.

4) Team up with attorneys: There are a number of attorneys who handle property sales on behalf of sellers or in special circumstances (like the death of the property owner). They might sometimes be looking to dispose off the property rather quickly and hence at a low price. Be the first one to grab such real estate investing opportunities and enjoy the profits.

5) Keep tab on the newspaper announcements: Property sell offs due to deaths, divorce settlements, immediate cash requirements and other reason are frequently announced in local papers. Keep track of such real estate investing avenues.

For more information and tips about Real estate investing please visit our web site: http://www.3arealestate.com

What I am going to reveal to you are some basic
truths about Real Estate investing – truths that may
totally affect the Real Estate investments you have
now – and certainly I intend to modify the way you
do Real Estate investing in the future.

Let’s get right to it – and into the heart of the real
estate investing issue.

You have been programmed all your life to become
what you are today – from school, friends, relatives
and, yes, your parents.

Recent studies show that you are who you are now,
more from what you learned prior to age 8 than in
anything else you have learned since.

Now, that may surprise you, but it is true that what
you learned at the earliest ages affects the way you
make Real Estate investments today, and the type
of Real Estate investing success you will have going
forward!

Yes, that’s a bit shocking.

You see, if you grew up in an environment where
you heard things like

“We can’t afford it”, “Be sure
you have saved enough and have the cash to buy it”
(i.e., never use credit), or numerous other phrases
that you now hear yourself saying (you know what
I’m talking about – those times you catch yourself
“becoming your parents”), it is because of your
early programming (from 0-8 years) and what you
were told about money, success, and life in general.

That is controlling your current income – and your
success – or lack of it…

The things you were told at that early, most
influential age, are now creeping out and affecting
how successful you are in business, in life and yes,
in your Real Estate investing.

THERE IS GOOD NEWS

The greatest thing about this fact – as horrible as it
seems – is that you can change the ‘programming’ –
you have the power to do it!

You can reprogram yourself in any way you want –
have anything you want – do anything you want.

All it takes is simply to ‘reinstall’ the right kind of
thinking.

And, it is easier than you might think!

One of the best ways to do that is to get a CD audio
set from someone you like to listen to – someone
that thinks positively and speaks of the life you want
to live. Many home study courses are available (yes,
including mine) that are designed to inspire and
motivate you, while they teach you the methods and
secrets of real estate investing.

Purchase one – listen to it, over and over – until you
hear yourself speaking that way, too.

You see, we are all simply creatures of habit and
environment – if we allow junk to get into our heads,
all we will ever say is junk coming out.

If all you listen to is the bad stuff in life (like the TV
news, most ‘talk radio’ shows, those TV ‘real life’
shows that end up in fights – you know the ones.,
and even violent movies where the language is
nothing you’d ever expect to hear from your own
lips.), that is exactly what you will wind up sounding
like!

It is true – ‘you are what you eat’ – and that counts
just as much for what you put in your ears as it does
for what you put in your mouth!

If you spend your time around ‘bar people’, you’ll
speak and act like them. Not that there’s anything
wrong with that, as long as you made a conscious
thought that it is what you want, but I think you’d
be much more successful at Real Estate investing if
you were listening to a successful person teaching
you about Real Estate Investing!

Now, let’s get right to the point about the various
methods and concepts you have learned about Real
Estate Investing.

You may call yourself a ‘real estate investing expert’,
but if you have to get up every morning and wonder
where your next check is coming from, you aren’t
making real estate investments, you are being
employed in a Real Estate Investing JOB!

Yes, that’s a hard-hitting statement.

You see, I want you to ‘get real’ with yourself and
simply admit it – Real Estate investing is when you
put money into a Real Estate investment and then
get some money out – ‘real estate investing’
defined.

Yet, it seems that most people I meet want to
attend my real estate training or purchase my real
estate courses that have to do with ‘No Money
Down’ (NMD) real estate investing.

Now, that kind of talk just proves the point – you can
reprogram yourself to speak a different language –
even if it doesn’t make sense!

A bunch of ‘gurus’ have told you over and over again
that ‘No Money Down’ is real estate investing – even
though you learned at an early age that ‘invest’
means to put money into something and get money
out (see http://dictionary.reference.com/search?q=invest for other definitions – none of them say ‘No
Money Down’…)

Now, it’s not that ‘NMD Real Estate investing’ is all
bad – heck, my students and I make several
thousand dollars from these types of ‘Real Estate
investing’ transactions every year, too.

Just don’t lie to yourself and say they are ‘real
estate investments’, we know very clearly that these
are simply ‘earned income’ from one portion of your
real estate investing business – the real estate ‘job’
portion – earned while in transition from your
‘corporate job’ to your ‘real estate investing job’ and
on the road to true Real Estate Investing.

In other real estate investing articles, I cover some
of the methods and techniques you, too, can explore
while moving from your ‘corporate job’ to your ‘real
estate investing job’ and you’ll learn some insider
secrets for taking that leap quickly.

Steve Majors – The Lazy Investor
Profit from Real Estate Investment articles, real estate investing information and news from one of the most creative investors on the planet ~FREE MEMBERSHIP & real estate training course~ http://SteveMajors.com

Effectively, it’s like drawing a line in the sand underneath the share price, saying, “If the share price falls below this line, then the stock hasn’t done what I thought it was going to do, and I’ll exit the position.”

This allows you to protect your investing trading plan, because it cuts your losses short, and guards against an all too human tendency to want to believe you must be right.

95% of investing in an entry Forex position means you are expecting to profit from the trade. If, however, the share-investing price goes against you, you might feel the need to justify why you bought the stock by holding onto it until it turns a profit. You might have heard the idea that all big investing losses once started as small losses. Well, while the share price continues to go in the wrong direction, those losses grow in lockstep. This is why you need to have a stop loss in place – it’s like having an ejector seat that tells you when to abort the mission.

One of the most common question I’m asked when traders are introduced to a stop loss is “How wide should I set my stop?”

In other words, how much room should I give the stock to move? There are no definitive answers to this question because it depends on what time frame you’re investing in. If you’re a shorter-term investing trader, you’re going to have a stop loss that’s set closer to the share price. If you’re a longer-term investing trader, you’ll give the share price a little bit more room to move and set your stop loss lower.

Once you’ve identified what time frame you’re looking at trading, you need to be able to remove the normal market noise (volatility) in that particular time frame. You don’t want to have to close out of an investing position just because a share price moved a little bit due to its normal trading volatility.

In fact, there are some serious drawbacks to setting tight stops.

First, you’ll decrease the reliability of your system because you get stopped out more often.

Second, and probably a little bit more importantly, you dramatically increase your transaction costs, because you’re trading transaction costs make up a major proportion of your business expenses.

To give yourself a fighting chance, you want to trade a system that doesn’t chew through excessive brokerage fees. This is one of the major reasons I steer my clients into developing a trading system that runs over a slightly longer time frame. With the correct system in place, and your investing risk minimized, you are well positioned to maximize your trading profits.

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comes to designing profitable stock trading systems.

Discover the “secret formula” of trading that anyone can use
to consistently generate BIG profits from the market by
downloading your FREE copy of David’s new Ultimate
Stock Trading Systems course.

Click Here To Download ==> Stock Trading Systems
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Investing is essential to making money. Whether it be stock investing, investing online, real estate investing, finance investing, investing in bonds, investing in mutual funds. All are essential in helping secure your finances, and financial stability for you and your family. If you are interested in investing, continue reading about ways to make money. We will briefly discuss the concepts of investing with stocks and mutual funds, investing with real estate and investing online.

Stock & Mutual Fund Investing

The stock market is a great place to make money. If you intend on investing with stocks and mutual funds, we highly suggest that you first do research on the companies you wish to invest in. Although the stock market is a great place to make money, there is also a degree of risk involved.

Real Estate Investing

Investing in real estate is safer than the stock market. A lot of people purchase homes that need are in need of remodeling, and can make a lot of money by fixing them up and selling them. Be advised that it isn’t as simple as buying a house, painting it, and then selling it. There are a lot of factors that you should consider before you attempt to invest in real estate.

Online Investing

Another fast growing way to invest is through trading online. Traders have the capability of doing research, buying and selling and making money with their investments all with the simplicity of sitting in front of a computer. It’s amazing at how easily you can work your finances online, and make money without even leaving the house!

If you plan on investing, make sure you educate yourself in the market or means in which you wish to proceed. Whether it be investing with stocks, investing with mutual funds, investing with real estate or investing online, do your research and make some money! If you are looking for a resource to help you with investing, you can visit our website and you will find ample information about investments, and how to make money.

Brian M. Gardner is the Founder of Financial-Articles.com – An Online Money Making Resource. Learn how to make money and acquire wealth by investing in stocks and mutual funds, as well as how to be successful in sales, marketing and advertising.

Visit Brian’s website at http://www.financial-articles.com

Passive Investing: In this form of investing, decision making for the investment is in others’ hands. The ideal one for this job is an expert investment manager. The big advantage in this method of investment is you don’t require investment expertise. You need to invest only money not time. The disadvantages are you don’t have control over your money for investing and the returns for such investments are uninspiring. Government bonds, savings accounts, mutual funds and property trusts are few common example of passive investing. These passive investments have some tax concessions that vary from country to country. People generally invest for retirement in passive investing.

Active Investing: In this form of investing you have to actively manage the investment. This type of investing is for long term as well as short term. Buy and hold shares are a long term investment while futures trading are a short term investment. To be successful in active investing, thorough knowledge about the various investment plans to be used is essential. The basic principles like timing to collect profits, cut losses and ways to analyze market are of utmost importance.

Larger control over the investments and higher profit potential are the advantages of active investing. Devoting more time and to have more skills in managing your investments are the disadvantages of active investing. When compared with passive investing, the chances of making loss are also higher. Investment in shares, futures, currency trading and property trading are the common examples in this category of investing.

Creative Investing: This type of investing requires huge amount of skill and experience. If you have them no one can stop you from making huge profits. It is all about turning your thoughts into money. Someone has rightly said those who have imagination can earn a lot. If you are a property developer you can put all imaginative ideas into the property to be developed to get ultimate out of it in terms of money.

Creative investing is the one which has highest profit potential along with maximum degree of flexibility and control. The drawbacks of this type of investing is you require specialized knowledge, the amount of money involved is huge and the chances of making large losses is high if things don’t move n the right direction. New product development and its marketing, property development, and renovation in properties are some common examples of creative investing.

Once you have the basic idea of all three categories of investing it is time to consider your knowledge and skills along with your strength and weaknesses to judge which form of investing is best suited for you as per your requirements.

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1) It must be database-driven

It must be able to collect information into a database and allow you to manipulate it any way you want, such as sending email, importing and exporting data and so on. Preferably, when someone submits information, you should receive an email and that information should be logged into a database.

2) It must be interactive

The ability to interact with visitors is a crucial, compulsory element of any modern web site, also extremely necessary in your real estate investing business. You must be able to gather any information and feedback you want from motivated sellers, house buyers, or any other visitors that you target in your real estate business.

Your motivated sellers must be able to leave testimonials, a crucial element in real estate investing.

It must be simple enough for them to submit their information on the web site rather than make a phone call; thereby you receive a fully pre-screened and pre-negotiated deals.

The ability to interact freely on social networking sites like Twitter, Facebook, MySpace and others is a basic necessity. Even if you do not use these services, your friends (buyers and other investors alike) will share them with their friends in the same media resulting to a quick sale. Most real estate investors today share their properties on these media.

3) It must be easy to use

You do not need to be a computer geek to run a real estate investing web site. Preferably, it should be controlled from a virtual back office (admin panel). The front end should completely free of maintenance.

4) It must be adaptable

Your web site must adapt to any real estate investing needs your business takes. You should be able to create new pages, add content easily, and create any forms to collect any type of information you want.

5) It must offer numerous designs

You do not want your web site to look like every other out there. It should offer a big selection of designs to choose from and the ability to customize them to suit your investing needs. You should be able to keep your brand such as logo or even a custom look if you need to. Preferably, you should not have to pay extra to choose any design you want.

6) It should offer automation capability

Your real estate investing web site must allow you to create unlimited follow-up autoresponders to handle email campaigns for your motivated sellers, buyers lists or any other lists you manage on your web site.

For example, if you wanted to send out a Thank You message to a motivated seller after they submit their information, all you need to do is to automate an instant message that says something like “Thank you for your enquiry. We will contact you within 24 hours” . Or something like that.

Similarly, you should be able to create automated reminders to remind you of any important events on your real estate investing business. Your busy schedule should not get in the way of important follow-ups so crucial to successful real estate investing.

7) It must be affordableSadly, most real estate investing products are just too expensive. If they do not hit you with a big upfront invoice, they get you stuck with monthly fees. This should not be the case. The web site must allow you to install it and run it from any web hosting account.

Be especially careful with companies that only charge a monthly fee (like $30) with no “setup fee”. In reality they offer a template hosting service branded as real estate investing web sites that must run on their server. You sign up with them, pay a monthly fee, but they own your web site.

The minute you stop paying the monthly fee, your web site will stop working or be deleted altogether along with your business. Do not fall into this trap. If at all possible, the web site should be a one-time purchase with no strings attached.

It must offer free lifetime support and upgradesWhen you buy your real estate investing web site, you must get free lifetime support and upgrades. If they offer every little thing as a module for an extra fee, run the other way.

These are just a few tips to look out for when shopping for a real estate investing web site. There are many other little things but if you follow these rules, you should be happy with what you get.

Simon Macharia is a real estate investor that also offers web 2.0 database-driven web sites for real estate investing at http://RealEstateInvestorsWebSites.Net

1. Loading up on company stock.

This creates a problem where you are actually increasing your risk to a very high and unreasonable level. You are basically betting everything your job and retirement plan on the company and if things go bad, you can lose everything. These employees are the ones who lose the most when the economy goes bad. Part of the blame is the employer pushing their stock on employees where they really do not necessarily have the employee’s best interest at heart.

2. Fail to diversify their funds among various asset classes.

Diversification is important to help reduce the risk of losses on any one investment class. Although this diversification changes depending on market conditions, diversification is one of the better strategies to help protect investors for long term investing.

3. Fail to check benefits plan for mistakes.

Many people fail to realize that mistakes can easily be made regarding contributions you wanted made or how you wanted the assets to be allocated. For this reason, it is a good idea to review your information on the personal benefits statements to make sure your information is accurate.

4. Fail to buildup an emergency reserve.

An emergency reserve fund is simply money set aside in savings account to pay for emergencies like car repairs. It should have about 3 to 6 months worth of living expenses in it. The failure of having an emergency reserve causes many people to have to borrow or withdraw from their 401k plan. This measure kills the advantage of compounding and can potentially invoke early withdrawal penalties. You should not invest in a 401k plan until you have established an emergency reserve fund. This is one of the most important rules in 401k investing advice as it provides a base for all your investing.

5. Fail to move funds to safer options when bad news starts appearing.

In the two recent recessions of 2000 and 2008, many people failed to act quickly to the bad news appearing in the market. This resulted in greater than necessary losses whether it was due to lack of appreciation for the impact of the news or indifference. This is one reason why it is so important to keep up to date on the market and how your funds are allocated. 401k participants should not be afraid to move funds to cash investments like a money market fund when bad news starts to appear. This can help safeguard your funds against everything but inflation.

6. Relying only on your 401k plan as the sole retirement plan.

This is a dangerous game to play because most 401k plans do not offer enough options for the best gains and diversification. For example, if your 401k plan fails to have an international fund, this creates a potential problem as you will have limited your opportunities to protect your 401k funds across the board in times of higher home inflation. Instead, it is a very good idea to make other investment options that can supplement and support your existing 401k. In this case, you should consider investing in other investments that allow you to potentially have access to an international fund. Other retirement plan options can range from investing directly in stocks, mutual funds, or using IRAs, Self Directed 401ks, or Roth 401ks or Roth IRAs.

By avoiding these common investing mistakes, you can help increase the odds of making good decisions. The best 401k investing advice will always be to learn from the mistakes of others so that you will not make the same mistakes in your own investing.

For more information on 401k Investing Advice, try visiting http://www.accountretirement.net – it is an information website offering tips and investment advice concerning all types of retirement plans and options.