Jordhan Woods

Whether you’re new to investing or have been monitoring the stock market for decades, there are common investment mistakes nearly all people make. By avoiding these blunders, you may see much better returns. Keep reading to learn more.

Timing The Market

A common error investors make is trying to alter their investment strategy based on where they think the stock market will head in the near term. Attempting to time the market is always tempting, however it’s important not be tempted by short-term success, performance or market sentiment. Instead think long-term and regularly contribute toward other investments each month.

Understanding Investments

Some investments only make sense for experienced investors because of their levels of complexity. Occasionally, new investors put money into assets that they don’t fully understand because of their potential returns. Investing in what you don’t understand is problematic because the risks may not reap the rewards. So before making a big investment, read the fine print and ask plenty of questions before becoming involved.

Not Diversifying

You’ve probably heard the phrase, “Don’t put all of your eggs in one basket.” This is particularly true in the investment sphere. An investment strategy is essential, however you shouldn’t ignore obvious issues. For example, some individuals put all of their funds towards a property that is dilapidated. A well-diversified portfolio should have a combination of equities, fixed interest, property and weightings determined by the risk profile of the investor.

Ignoring Fees

Fees take a larger toll on total investment dollars than virtually any other mistake. Many investors pay a large chunk of fees each year because they’re trading or attempting to beat the market with actively managed funds. The same results (or better) can usually be had by lower fee index investments. Keep an eye on the individual transaction costs and annual fees and consider the lower cost options over active management.

Refusing Advice

Independent financial advisors can help investors find the right investment portfolio to match their goals and assess the risks involved. The individuals who choose to seek out these opportunities alone lack the expertise, and often don’t notice their mistakes until it’s too late.

Via OnStride