Successful investing involves making several smart moves, but it’s just as important to avoid making some key mistakes. Along those lines, the Wall Street Journal recently highlighted Five Really Dumb Money Moves You’ve Got to Avoid. Let’s take them from the top.

1. Reaching for yield

What this country needs is a good 5% certificate of deposit. Instead the collapse in interest rates, and the Federal Reserve’s policy of keeping them down for as long as possible, is driving people crazy—especially people who need to generate income from their investments.

In these circumstances, people start to do really foolish things in the desperate hunt for higher interest rates. That includes taking on crazy amounts of risk, or investing in complex products they don’t understand, in the hope of higher yields….

For some reason, people have a hard time understanding that when they put money in anything that offers a better return (than the widely known and understood forms of investing), there’s a risk-related reason for that higher payout. It’s highly likely that investors lose more money due to seeking higher returns in “sure-fire” investments that promise significantly high returns than for any other reason. Please don’t be naive.

2. Going into the poor house to send Junior to a country-club college.

Over the past 40 years, the cost of tuition and fees at a private university has tripled—after accounting for inflation. The cost of a public university has quadrupled. The cost of getting a bachelor’s degree has become a scandal in this country. Students spend $160,000 on a four-year degree and the results are too often questionable.

Financial planners strongly advise parents against plundering their own retirement savings, which they are likely to need, to pay for this.

Completely agree! For many years I have advised parents, “Don’t do it!” There are many ways for students to get out of college with little to no debt, but older parents don’t have as many options if they face higher-than-expected living expenses during retirement. We all love our kids and provide for them the best we can, but community colleges, grants, scholarships, and, dare I say it, working through college, are all options for them that should be on the table.

3. Owning stock in your employer

This is one of the silliest and riskiest moves any investor can make. If the company hits trouble, you get whacked twice. You can lose your job and your savings—all in one fell swoop. Ask anyone who worked for Enron…or Lehman Brothers.

This should be familiar territory for SMI readers. We’re written on this topic many times, most recently in April 2012. We concluded: “a general guideline that is useful is to limit your investing in any one stock (your company or otherwise) to 5%-15% of your total investable assets. Given that you already have so many of your financial eggs in your employer’s basket (i.e., your income and your health benefits), the lower end of that range is probably more appropriate when dealing with your company’s stock. Also, the smaller the value of your total portfolio, the more you should gravitate to the lower end of the range.”

4. Taking Social Security too early

If you can afford to delay taking your Social Security retirement benefit, do. Someone earning $50,000 a year who starts claiming Social Security as soon as he or she is able, age 62, will typically collect a monthly check of about $1,000, according to the Social Security Administration. If they wait until they are 70, that amount would double.

This is another familiar topic; we have long advised that for most people it’s best to wait at least until your Full Retirement Age before drawing benefits.

5. Buying long-term bonds

A surprising number of people still subscribe to the flawed and circular argument that bonds, including long-term government bonds, are “safe.” In reality, bonds—especially long-term government bonds—are the rare example of a bubble that has been explicitly declared. The Fed is openly printing money and using it to buy up such bonds, driving up the price and driving down the interest rates, in order to help the economy. There is no dispute about this. It’s public policy.

A 30-year Treasury bond currently sports an interest rate of just 3.1%. That’s barely half a percentage point above long-term inflation forecasts. Based on history, the yield should be at least 4.5%, or two percentage points above inflation. Thirty-year Treasury inflation-protected securities, known as TIPS, sport a “real” or inflation-adjusted yield of 0.6% a year. Again, it should be 2%.

We haven’t recommended long-term bonds for years due to the risk. And TIPS, which gave us a nice return last year, were dropped from this year’s allocation recommendations due to the risk.

So, I’m hopeful that no SMI readers will be found guilty of these five “really dumb” money moves. We’re here to help you avoid those.

By Austin Pryor

Austin Pryor has three decades of experience advising investors, and is the founder of the Sound Mind Investing newsletter and website. Austin lives in Louisville, Kentucky, with Susie, his wife of 46 years. Two of his sons, Andrew and Matthew, work with him at Sound Mind Investing. A third son, Tre, is a Realtor® in the area.