Even the richest among us can make rookie investment errors.
One of the world’s biggest money advisers asked 880 of their most minted clients about the gaffes they’ve made investing. The results were comfortingly common.
Not having a plan
Almost a quarter of millionaires said their number one mistake prior to getting expert advice was investing without a plan. As deVere Group head honcho Nigel Green says, “To my mind, unless you have a sound investment plan you are gambling, not investing.”
Failing to diversify
Twenty three per cent of the financial fat cats said failing to sufficiently diversify their portfolio was their Achilles heel. Again, an easy but costly mistake to make; spreading your investments is crucial to manage risk.
Making emotional decisions
One in five wealthy clients said letting their emotions creep into investment decisions was their biggest fail. Unfortunately, letting your heart run the numbers leaves decisions open to biases based on your past experience, and that’s no good for getting rich.
Living in the past
Fourteen per cent of people put their hand up for focussing too much on previous returns. And, as every inch of financial sales literature says, past returns are not an indicator of future performance.
Failing to review
Failing to regularly review portfolios was picked as the number one error by 16 per cent of punters. This is probably the least surprising of the bunch, but a bad mistake nonetheless.
If you’re a part-time share pundit, these mistakes are probably common and somewhat comforting to hear. But that doesn’t make them excusable.
So set some time aside to plan your attack, spread your investments, quash emotions and focus on the future. Then review it, regularly.
If you can’t, then get an expert to give you a hand.