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Investing In The Wrong Stuff

BOSTON (CBS) - Most investors don't even realize they are in the wrong type of investment until it's too late. Asset allocation is simply what your money is invested in; mutual funds, stocks, bonds, cash, real estate.

Your time horizon is when you will need the money for the goal. So you want your time horizon to match your goals. And that's where the problem lies.

Not saving more for a college education is something I heard frequently. You have known about college costs since the kid was born. But you wake up one day and realize she's 15 and a starting forward on the soccer team.

Often folks try to make up for their lack of savings and invest in mutual funds or stocks that are high risk thinking they equate with high returns. You only have a few years to save. Forget about the emerging market mutual funds.

Look for a balanced mutual fund or some short term bonds. Or better still use the state's 529 plan managed by Fidelity Investments.

Another regret I have heard from parents of college bound kids is that they borrowed from their retirement plans. One man told of having nothing for kiddo #2 and another told of losing her job and had to pay taxes and a 10% penalty on the money she borrowed for she couldn't pay it back.

When it comes to our kids and money I found that most parents do want to help when their daughter gets married but most forget to start to save for that special day. Your daughter just got engaged and the wedding is in 18 months. This is a short term goal. And I heard from folks that decided to invest in the stock market to make a quick buck so you could give her a proper wedding.

Sadly they lost some of their money and they either had to borrow the money using credit cards or a home equity loan or tell their daughter that the 150 guest list needs to be pared down 40 or less.

The money should be safe and not in the stock market. CDs, money market, Treasuries is where it belongs. I know the interest rates are lousy but your money is safe and will be there when needed to make those down payments every vendor requires.

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You can hear Dee Lee's expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee's Money Matters newsletter here.

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