Illiquid Real Estate Investments May Protect Investors from Bad Instincts

By Mark Germain via

If you’re in danger of shooting yourself in the foot, it’s a good idea to remove the bullets.

The same principle can be applied to investing. It takes the form of moving a modest portion of your portfolio into an illiquid (but carefully selected) investment, if you’re prone to be overly attentive to the day-to-day fluctuations in the market value of your stock and bond portfolio.

Investors generally know they’re supposed to keep their time horizon in mind as they behold the inevitable bumps in the market. However, for many, emotions overpower reason and they flee to cash at the first sign of a market correction. (This is not intended as a prediction of an impending market drop, but we all know it’s bound to happen sooner or later.) The inevitable result is suboptimal returns, because panicky investors typically wait too long to get back in the market. Plus they often pull out when the market is at the threshold of a turn-around.

Click here to read the full story on

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.