There was a special conference round-table discussion recently that involved Carlson Capital Management, Plancorp, and Savant Capital Management, members of the Zero Alpha Group, a nationwide network of eight fee-only investment advisory firms that manage more than $3.5 billion assets. In effect, they issued a warning that investors who are without long-term financial plans are making the same five costly errors over and over.

According to Justin Stets, principal at Carlson, "Uncertainty and confusion are the number one enemies of the investor who operates blindly and without the benefit of a long-term plan."

These three financial experts say that the most common investor mistakes are chasing returns on foreign investments and ignoring domestic opportunities, taking a short-term view of tax avoidance, over-concentrating in real estate, treating hot investment alternatives (such as hedge funds and private equity funds) as though they were asset classes, and ignoring the full costs of owning certain investment products, such as a stock fund inside an annuity.

Stets points out that when an individual is trying to read uncertain market signals every day and ends up jumping erratically from one hot trend or product to another, the only thing that is likely is that the individual will end up worse off than when he or she started. "We want to encourage investors who are grasping at straws today to take a deep breath, calm down, and get focused on a real plan."

Thomas Muldowney, managing direct at Savant, compared real estate to the tech stock stampede in the 1990s, which is always fodder for discussion. "It won't take much of a correction in real estate prices to put investors who are over-concentrated there into an extremely painful bind. Real estate is fine as part of most investment portfolios, but if it throws off your overall diversification, you are setting yourself up for a fall."

Another hot topic was ignoring the costs of owning an investment. Jeff Buckner, president of Plancorp, notes that in a market that is going up fast, investment costs can seem almost pain-free but that every bit of cost hurts when there is a situation like today's market which is flat and often down. "Consider the costs of owning a stock fund inside an annuity, which adds an additional 1.75 percent to the cost of the fund. The average cost of a mutual fund today is 1.3 percent. Before the investor makes a fraction of a percent, the annuity has to clear those hurdles, which are not inconsiderable in today's unforgiving market."

If you want to learn more about today's most dangerous pitfalls and the need for long-term financial planning, take a look at

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