5 Investment Mistakes People Often Make
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| Investment Mistakes People Often Make |
1. Putting All Your Eggs In One Basket
Investment experts agree that investing in just one company, asset class, product or region can be very dangerous. Even the Bible advices as to invest in seven ventures. You need to invest in a range of asset classes from equities to bonds, and across different regions so if one investment goes bad you won't lose everything and probably get heart attack.
If you have a separate pension, remember to check what it's invested in so your new portfolio isn't too similar.
2. Putting Hope On and Backing Previous Performing Assets
The top-performing assets in one year can continue to do well or they could just as easily disappoint you the following year.
According to experts, asset classes bounce around from top to bottom in the performance tables every year. Unless investors think they can devote the time to study the markets in great detail, a multi-manager or multi-asset fund is often a wise choice.
3. Last Minute Investing
Invest earlier rather than later in the tax year to give your money more time to grow in the market over the long run. This will also give you more time to think about what to invest in. "Avoid investing in haste. Don't invest in the first thing you're told about.
"There's nothing more annoying than putting your cash in, only to wish that you'd gone for something else just a little bit later," --- Andrew Merricks of Skerritts Wealth Management.
4. Switching Too Often
An Investor must exercise a great deal of patience. Switching too often becomes a tax on investments due to the costs of buying and selling. You should invest for the long term; at least five years if you're investing in equities. Avoid high turnover - if you deal too much, turnover becomes a tax on investments. Mind you, it is the investor that is actually the asset or liability and not necessarily the product itself.
5. Being Swayed By Advertisement
Investment firms have big budgets and love to advertise their latest funds everywhere. One of the biggest mistakes beginner investors make is buying fad investment funds and getting suckered into investing in a brand new investment fund just because a lot of money has been spent on advertising.
Experts warns against relying on ‘star fund managers' who rarely live up to their title and can easily resign or retire.
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