The 5 Worst Money Mistakes You Could've Made So Far in 2013

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The first half of 2013 was a wild ride, and the second half is off to an even wackier start.

With equity prices rallying, commodity prices retreating, and interest rates starting to inch higher, nobody can say where markets and the economy are going next? But hindsight is 20/20, so we can see where it's been. With that in mind, here's a look at some of the most unfortunate money moves people have made thus far this year.

1. Failing to Refinance or Buy a Home When Mortgage Rates Were Low

It's still historically cheap to finance a new home purchase or refinance an existing property, but a lot of homeowners and potential homebuyers are kicking themselves these days. Mortgage rates bottomed out late last year at 3.31 percent for the popular 30-year term, and they managed to hover around 3.5 percent through most of 2013.

However, as the economy shows signs of life it's getting more expensive to take advantage. Rates have been spiking since May, and Bankrate.com reports that the average 30-year mortgage will now stick borrowers with a 4.48 percent rate. In other words, financing a new house or refinancing an existing one will cost new borrowers roughly 15 percent more in interest payments than it would have just two months ago.

2. Buying Gold as a Hedge Against Inflation

Now would seem to be a great time to own gold. There's no shortage of political instability in some pockets of the world. Inflation fears are creeping in as the economy improves. Many emerging markets are starting to come into their own. Currency fluctuations in some countries have been dizzying.

However, gold has been a colossal disappointment against this seemingly metal-friendly backdrop. Gold prices have fallen 23 percent over the past six months, making it a disastrous investment at a time when most asset classes have moved nicely higher.

When's the last time that you were invited to a gold party where attendees sell old jewelry for cash? You don't see those "we will buy your gold" infomercials late at night anymore. Gold has a funny way of coming back to life when you least expect it, but it's been a huge dud so far this year.

3. Avoiding Last Year's Stock Losers

Promotional material for investments often carry a disclaimer at the bottom, alerting readers that past performance is not an indicator of future performance. This has certainly been the case with some of last year's worst stocks. Some of this year's biggest winners were last year's biggest losers.

Best Buy (BBY) shed nearly half of its value last year as sales slipped and margins plummeted. The retailer's founder tried to take the company public last summer, abandoning his pursuit a few months later. However, the consumer electronics superstore chain's new CEO has won raves for his turnaround strategy. The stock has nearly tripled in 2013.

Groupon (GRPN) saw its stock plunge 76 percent last year. But the daily deals leader has nearly doubled this year as with a new CEO. Groupon's emphasis has been on milking its local merchant relationships to offer more than flash sales. That has analysts seeing increasing revenue and profitability for all of 2013.

Most stocks fall for good reasons, but don't assume that they will never bounce back.

4. Selling in May and Going Away

It's all too easy for investors to get tripped up by pithy adages that purport to be universal truths. When mutual funds and exchange-traded funds in this country had a record inflow of $39.4 billion in new investments for the month of January, contrarians figured that it was a good sign to sell. ("Buy when everyone else is selling and hold until everyone else is buying." - J. Paul Getty) So many people storming back into the market just had to be a sign that it was time to bail, right?

It wasn't. Mutual funds have generally moved firmly higher so far in 2013.

A few months later, many market watchers began urging investors to cash out in May based the old aphorism that claims that markets get weak between May and Labor Day. But there hasn't been a warm weather lull this year. The S&P 500 has climbed another 5 percent since the start of May.

5. Not Buying That Home You Wanted

It's not just rising mortgage rates that are making it harder for folks to get the keys to their dream homes: Real estate prices are also shooting higher. The latest S&P/Case-Shiller data that tracks the housing market in the country's 20 largest cities shows that home prices have risen 12 percent over the past year through April.

The net result: Reports from the National Association of Realtors show an 18 percent decline in housing affordability since January.

Things may not necessarily get worse. If anything, the spike in mortgage rates should eventually lead to property prices at least stabilizing. However, it probably wasn't fun for people hoping to buy new homes this year seeing the trends go against them.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our newsletter services free for 30 days.

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95 Comments

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Dan

So I guess my old strategy of Buy High - Sell Low will not work in these times, huh? Sooner or later I will figure out this investing stuff.

July 23 2013 at 3:31 AM Report abuse +1 rate up rate down Reply
lsipsip

What mistakes? Can't make mistakes if one is not employed!

July 22 2013 at 7:05 PM Report abuse +1 rate up rate down Reply
RWE

Not sure about gold. The fact the masses got into gold made the elites nervous.
You can collapse any market if you have the Printed cash to short the market and
collect the difference. Those same bastards will then buy physical gold (yours) at
a deep discount with the same play money. If you have gold, hoard it. Do not buy
in but do not liquidate either.

July 22 2013 at 4:12 PM Report abuse +1 rate up rate down Reply
Robert DelRaso

Like at that time we really had the money to do all these 5 issues - lets get real - at that time we will still hurting for money - Our president is taking alot away from us. He doesn't think he's doing anything wrong. I wish he would something like the movie call TRADING PLACES where Dan Akroyd and Eddie Murphy trade places(Akroyd a rich business man and Murphy a poor honeless person) Love to see how our President Obama live like a homeless person for a whole year then go back as the president. I betcha Obama would have second thoughts on his stupidity moves.

July 22 2013 at 4:00 PM Report abuse -2 rate up rate down Reply
norman

I am NOT eating those gold chocolate bars anymore...

July 22 2013 at 1:26 PM Report abuse +1 rate up rate down Reply
analyst0042

How many of the people here invest in the equity market only when the economy is performing well? The best time to invest is when the economy is in terrible shape.

July 22 2013 at 1:05 PM Report abuse +1 rate up rate down Reply
pcarrca

This article is putting the cart before the horse. Anyone who knows anything about what is really happening in the economy has to laugh at such notions. Buying a house because interest rate are low is smart only if those interest rate are not artificially low because of government intervention. Buying a house at a higher interest rate and lower price is the only way to go. If you got tricked into buying a house I feel badly for you. As far as gold goes, it is smart to invest in it if you are not in it for just a short period. The US economy is in for a huge hit here in the near future and sure to see unemployment surge to unimaginable levels. I wish it weren't a forgone conclusion but sorry to say it is. My two daughters will be living in a country that is quite different from today. Get out of the dollar because it is going to take a hit. If you listen to the logic of people like Peter schiff you can really only come to one conclusion. The USA is bankrupt and there is no soft landing. It is very sad .

July 22 2013 at 2:00 AM Report abuse rate up rate down Reply
1 reply to pcarrca's comment
pfjw

Ummmmm.... Ummmmm

Buying (or refinancing) a house when the interest rates are low is smart (if you can afford it in the first place, of course) whether those rates are artificially low or not. We purchased our house six years ago, and we have refinanced twice since, our present rate being 2.25% (APR) on a 15 year mortgage. We will have that rate for the life of our mortgage. And we could have had 2.79% (APR) on a 30-year loan.

Gold (any precious metal without a significant practical use) cannot be eaten and has value only as long as a significant economic infrastructure survives. In the case of Armageddon, a box of .22 shells and a gun to shoot them will be worth 20 x that weight in gold. And a year's supply of insulin, for example - where do you want the truck unloaded? Put another way, silver has intrinsic value far beyond its worth in currency. Gold does not. Investing in it at any level other than pure vanity is truly a fool's game.

"Getting out of the dollar" is just silly. If the US economy takes such a hit that the dollar becomes worthless, the only 'way out' is to leave the country. The Japanese found this out the hard way when they invested in US real-estate just before the market tanked. Foreign currency, foreign stocks, foreign real-estate works 'over there' but not hardly 'over here'. Most of these catastrophic scenarios assume that there will be a fully functioning economy such that those so-called 'wise' investments actually have value. But if it gets so bad that they could have value, in the real world they simply won't.

The US is no more bankrupt than any other given country in the world. Take China for example - If the dollar become worthless, they are far more screwed than we are. As would be Great Britain, Germany, Japan and many more significant nations. So despite the doom-and-gloom proponents, the _ENTIRE_ world, rich and poor has a vested interest in the stability of all currencies. We must, indeed, all hang together or, most assuredly, we shall all hang separately (Ben Franklin). Only now it is the entire world, not just a few colonials.

July 22 2013 at 4:06 PM Report abuse rate up rate down Reply
Nikephoros

Glad to see the "Don't buy gold, put your trust in the elites and their equities" propaganda machine is still working overtime.

July 22 2013 at 1:22 AM Report abuse -1 rate up rate down Reply
1 reply to Nikephoros's comment
jdykbpl45

In Bernake we trust!

July 22 2013 at 6:09 AM Report abuse rate up rate down Reply
frisco9312

and this article should particularly please the glenn beck lemmings, how ya gonna get that taste out of your mouth?

July 21 2013 at 11:37 PM Report abuse rate up rate down Reply
1 reply to frisco9312's comment
jdykbpl45

Rather tuust Glenn Beck than Bernake.

July 22 2013 at 6:09 AM Report abuse +2 rate up rate down Reply
lsuhysr

AND OIL will go up to 150.00 a bairol and Gold will be the best place to be

July 21 2013 at 11:24 PM Report abuse +1 rate up rate down Reply