Real
Estate & Stock Investments;
Buying At The Top & Selling At the Bottom
I have spoken a lot lately on the topic
of personal finance. The one comment I consistently hear
from several conference
attendees is, "My friends or family took their money
out of stocks and placed them into real estate, when the
market crashed." Then they proceed to tell me how
lucky they were to get out before they lost their shirt.
What this comment tells me is how much the average person
needs to concentrate on getting the facts right.
I interpret statements in the previous paragraph as follows,
1. Their friends sold stocks at the bottom of the market.
We all know that stocks recently reached all time lows, at
least in the past few years 2. They bought real estate at
the top of the market. Real estate in many major markets
are at all time highs, many experts believe that major real
estate markets exist in a bubble, that is, many homes are
falsely priced high as stocks recently were. Because of this,
I consistently ask the same question of my conference attendees:
Why would your friends or family buy real estate at the top
of the market? And, Why would they sell stocks or other investments,
at the bottom of the market? Following these questions, I
usually see a baffled look on their face, with no verbal
comment.
What the proceeding comments tell
me is that my book, Let's Get Financial Savvy! is far more
necessary than I ever dreamed.
I still feel that stocks should be sold at the top, not the
bottom, and that real estate should be purchased at reasonable
prices, not at the top of a real estate market. Perhaps some
people can find reasonable prices in a high real estate market,
but judging from my conference attendees’ comments,
I really don't think their friends were looking for "reasonable
prices", or even understood the importance of such.
The stock market has increased substantially from its all
time lows of the recent past, some major real estate markets
have decreased in price, while others remain in a falsely
high priced bubble. Be careful and get the facts before you
invest.
Lois Center-Shabazz is the founder of MsFinancialSavvy.com
and author of the 3-time award-winning personal finance
book, Let's Get Financial Savvy! ISBN #0971979502.
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