Some investors make mistakes that could probably have been avoided or at least mitigated. If you are new to investment or wish to get back on track with your investment plans I have listed 4 of the most common investment mistakes.
We all make mistakes in life or in our profession and finance isn’t immune to this. Quite the contrary: investment mistakes are very easy to make.
Some of the world’s highest profile and most successful investors, including Warren Buffett, and Microsoft’s founder Bill Gates, have all publicly shared some of their investment mistakes.
For some people, the fact that big boys also fail is a sign that maybe small investors should save their money or stick to low risk financial products and investments
. Not quite.
In my opinion not putting your money to work is far more perilous in the long term. Proof of this is that the overwhelming majority of the world’s high net worth individuals and ultra high net worth individuals are committed investors.
In the words of play writer Samuel Beckett, ‘fail again, fail better’.
Investing money is about avoiding investment mistakes by seeking professional, independent advice. It is also about learning from others. Not just investors, but successful people of all walks of life.
After all, in an ever-changing world, investing is becoming more and more an important part of your financial success and independence.
Here are my top four investment mistakes to avoid to seriously building your wealth:
Don’t Move in and Out of the Market. Time the Market
When it comes to investing, typically, the goal is to create income or multiply wealth from capital. The best way to achieve this is to consistently stay invested rather than moving in and out as the market shifts.
History teaches that, over a longer time horizon, financial markets have an upward trajectory. Achieving financial success, it is all about time in the market, not timing the market.
Don’t Put All Your Eggs in One Basket. Diversify, Diversify, diversify
Not putting all your eggs in one basket is, as everyone knows, one of the pillars for good investments. But it is always surprising the high number of investors who don’t manage to get this quite right.
Diversify assets across different sectors and geographical regions.
Don’t Invest All You Have. Have money available
The good old ‘saving for a rainy day’ it is especially true in these days of computers, investment algorithms and high frequency trading. Keeping a reserve of cash offers a financial security blanket. That said it is important to get the balance right. Holding too much cash over extended periods can be detrimental to your long term financial goals, as inflation can gradually erode it.
And finally, number for of the most common mistakes made by investors…
Don’ Get Carried Away. Know Your Objectives
It’s good to know where to invest. But before looking for good investments, you should know why you are investing in the first place.
Emotions have a very special place in our lives. However, with investing, letting emotion take the lead can lead to bad decisions and loss of money. There should be no place for undue loyalty, keeping up appearances or adopting a herd mentality.
We all make mistakes. But markets are full of investment opportunities
Mistakes are an inevitable part of life. However, I believe that should we avoid these errors, we should be well positioned to mitigate potential investment risks and take advantage of the many considerable investment opportunities.
Ready to put your money to work and start investing? Here are some inspiring investment quotes
to get you started.
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