Tuesday, 28 December 2010 22:12
When it comes to investing, emotions and anxiety run high. One mistake can cost you thousands. With a good plan in place, you can rest a little easier. Here are some investment mistakes to avoid.
Not having a long-term strategy
If you are investing for the moment and don’t have goals and a long-term strategy in place, you are more prone to stress when the market fluctuates. Understand your risk tolerance and develop a plan that reflects it.
Letting your emotions take over
If you are trading single stocks and using daily media reports to make your investment decisions, you could be losing sight of the bigger picture and missing out on larger returns. It’s important to stay up-to-date on trends and the market, but letting news stories “scare” you into selling a stock is not a good investment strategy.
Not diversified enough
As stated before, knowing your tolerance for risk is important but make sure you diversify your portfolio. Just because you have a high tolerance doesn’t mean you should have all of your investments in high risk stocks. Make sure you have a variety of different stocks and bonds.
Never updating your plan
If you haven’t reallocated your retirement funds since you began your career 20 years ago, it’s time to readjust. Have an investment advisor take a look at your current portfolio and make suggestions based on your new age and risk tolerance.
Trying to go it alone
With all of the available technology today, many investors feel they have enough tools and information to invest on their own. It is important to consult an investment advisor (even if it is your buddy or brother-in-law). Many people don’t see the bigger picture and could use a second opinion on their investment portfolio.