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The Best Financial Non-Move To Make

It's not just buyers feeling lost in today's real estate market. Many current homeowners are scratching their heads over what to do with what's likely their largest investment.

How about doing nothing? Novel approach, we know, but staying with the status quo may be the best financial non-move you make this year.

It's not a bad idea to approach the housing market with the attitude of a savvy stock investor -- one who believes in the benefits of buy-and-hold investing. Long-term buyers know that they will most likely be rewarded despite the market's day-to-day ups and downs.

What dashes the dreams of the long-term homeowner are market timing and short-term catastrophes that drain the bank accounts. As with investing, you can reduce price risk (that is, having to cash out at the exact wrong time) if you plan to stay in your home for at least five years. Consider a worst-case scenario: How would you feel if your home's value tanked next year? What if you or a spouse were transferred to a new locale and you had to sell? The ability to answer such questions honestly will help you avoid the stink of market timing and speculation.

Here's another investor attitude worth adopting: Your buying/selling/renovating decisions should be guided not by the market but by your own personal situation.

Avoid the sting of having to sell at the exact wrong time with a few simple precautions:

Establish an adequate emergency fund. That way you won't be forced to sell the farm to make ends meet during trying times.

Ignore the Joneses: Riveted to the real estate section of your newspaper? Remember, you don't lose a dime of your investment until you actually sell.

Be smart about borrowing against your investment: If you're considering taking out a home equity loan, make sure it's for the right reasons. Again, think long-term. Using the extra cash to pay for essential expenses that improve you and your family's future is one thing (think home improvement, college). Borrowing the money for a short-term treat (e.g. vacation, car stereo) is quite the opposite.

Whatever history tells us about this time period, remember that a home is where you live. When you're tempted to somehow play the current market, remember this: Just don't.

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