Top 3 Mistakes Investors Make
- Failure to Focus. Just by observation I can say that many investors lack a coherent focus to their strategy and their habits. Investors need to define their strategy based on their time horizon, skills, beliefs, and life situation. Once that strategy is defined, investors should stick to their system long term and not waver back and forth between strategies and investment ideas/styles. This type of back and forth tends to lead to high trading fees, high expectations in short time periods, and low success rates long term.
- Unrealistic Time Horizon Expectations. Unless you are a trader, equity-based investments should be held for the long term (5 years+). Shorter term (1- 4 year) investments should be diversified in vehicles such as bonds, high interest savings accounts, and money market funds.
- Failure to Recognize the Equality of 'Investments'. Real estate is to stocks, as stocks are to fine art. Investments come in all shapes and sizes. One can compare the characteristics and fundamentals of investments and the markets they function in. There are far too many people who generalize and believe real estate is 'safer' than stocks. The real estate boom and bust in the U.S. should have revealed the equality of all investments to us all.