5 Common Investment Mistakes And How To Avoid Them

Whether you are just starting to invest or have been for years, mistakes will be made — unfortunately, more than once. However, making mistakes is all part of the learning process. Here are a few common investment mishaps and how you can best avoid them:

Being Too Conservative

If you are thinking about taking the safer route and leaving your money in cash or a stable value fund, this could cause more harm than good. You’re running the risk of not letting your money grow enough due to inflation. Another risk is that you won’t have enough saved by the time you retire. If you want to play it safe, it’s best to have an appropriate rate of return.

More Aggressive or Not Aggressive Enough

The most common investment goal is to save for retirement, and almost anyone can set up some sort of employer-sponsored or individual plan. The trick is to choose an investment strategy that matches your current career stage. If you’re in your mid-20s, make sure to choose an aggressive plan, as you have more time to collect shares that will yield results in the long term. As you get into your 40’s and 50’s, begin to shift your focus to conservative opportunities to ensure your money will be there when you retire.

Paying Too Much for an Investment Adviser

If you are in the beginning stages of investing, you might have already considered hiring an adviser to help you out. There is nothing wrong with asking for help, but you will need to hire a reputable adviser, specifically a fiduciary adviser. Legally, a fiduciary adviser must disclose all conflicts of interest and be fully transparent with their clients.

Not Regularly Checking Investments

Diversifying your investments is key, but this means you’ll need to pay attention to which funds are doing better than others. For example, let’s say you have two investments with the same amount of money, and your goal is to keep it at a 50-50 split. During the year, one investment goes up while the other one remains the same. If this continues, you won’t be able to maintain your goal of an even split. It’s important to check these things every so often and adjust each investment to your desired amount.

Don’t Be Afraid of the Past

It doesn’t matter how much or how little someone knows about finance, they still can’t predict the future. When the market crashed several years ago, investment “gurus” claimed they knew it was going to happen. The truth is, the market is unpredictable and no one knows exactly what is going to happen. It’s best to look forward and not analyze the past.

No matter how new or experienced you are with investing, making mistakes is inevitable. These are just a few you might come across and hopefully be able to dodge when the time comes. If you would like to discuss further on investing, feel free to contact us.

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