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Common investment mistakes and how to avoid them

Our advisors here at Guardian Wealth Management offer investment advice every day to our valued clients and while providing this service we get to see firsthand some of the most common investment mistakes that people make. This allows us to steer our clients onto more positive paths where they can avoid making these mistakes and maximise their investments for the best possible financial outcome.

If you’re an investor looking to make the best financial decisions and maximise your returns, we’ve compiled the following list of common investment mistakes to help you.

Avoiding investment mistakes

  • Following the crowd – the old adage ‘there’s safety in numbers’ doesn’t apply to investing. Far too many people follow their peers and buy when everyone else is buying. This also tends to work the other way too and people avoid making investments when others advise against it. However, if this advice isn’t coming from financial planning professionals what makes you think it’s correct? If you’re investing with a medium to long-term outlook, investing when the markets are low represents real value. It gives you the opportunity to purchase at a discount and then sit back and wait for the markets to recover – which they inevitably will. This is when the real value of your investment can be realised.
  • Hanging on to losing stocks & shares – there are many reasons that investors hang on to stock & shares that are losing them money; embarrassment, stubbornness or fear can all be contributing factors. In our experience, it’s most likely that people don’t want to admit that they’ve made a mistake. You need to be more practical rather than emotionally driven and know when to cut your losses before your asset ends up losing you even more money.
  • Trying to time the market – there’s never a correct time to invest; timing the market is impossible so a solution  can be to make smaller investments on a monthly basis, enabling you to take advantage of pound/dollar cost averaging.
  • Failing to diversify – good investment decisions are often about managing risk. If you place too much money in any one stock/share, fund, country or asset class, you’re taking a major risk – even if your general outlook makes you feel that you’re a cautious investor. In volatile times, it’s far better to spread your investments so that each of your chosen assets responds differently to market conditions.
  • Leaving it too late – the worst thing you can do is not invest at all! For every five years that you delay investing, you will have to save up to 50% more every month in order to achieve the same financial objectives in the future.
  • Relying on friends and family for advice – everyone wants to consider themselves an expert and everybody likes to have an opinion, but friends and families are not in a position to offer proper trusted and objective investment advice. These people are not financially trained and can’t source or advise on products from leading banks and financial institutes. However, Guardian Wealth Management advisers can! We offer a free, no-obligation financial health check, impartial advice and first-class service.

By taking note of these common investment mistakes you will be able to avoid the potential pitfalls that could turn your fortunes around – and not for the better! If you’d like to talk to one of our advisers for some independent advice and guidance on investing, get in touch with us – and in the meantime, avoid making these investment mistakes!

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