Investment allows you to grow your wealth way beyond your salary or any basic savings plan. Investing can help you preserve your spending power, grow your capital wealth, and enjoy a long and prosperous retirement. This makes it an essential part of any solid financial plan.
By its very nature, investing requires a certain level of risk. However, with proper planning and the backing of a team of professional investment experts, you can improve your investment outcomes. Also, it’s a good idea to avoid common investment mistakes that impact your chances of positive returns. And the best way to avoid these is to combine awareness with help from a respected independent financial adviser.
Avoid these five key investment mistakes
1. Investing without a plan
Investment should not be a goal in and of itself – it needs to be aligned to your specific financial goals and you need to be able to work out whether you are on track to achieve your objectives or evaluate what kinds of risks you are willing and able to take. Whether providing educational funds for your children or protecting your retirement, investment is a means to an end and needs to be managed as such.
2. Putting all your eggs in one basket
Whether it’s focusing on only one asset class, taking extreme risks, or being overly conservative, a lack of balance will not serve your investment strategy well. The essence of good investing is balancing risk with reward and learning how to better manage your risks so you can pursue greater rewards. Every investment you make needs a time-frame, a goal, and an exit plan.
3. Skipping regular reviews
Life changes all the time, as do the markets and your financial goals. You need to monitor, evaluate, and amend your portfolio as required on a regular basis (or work with a team that will do that for you). You need to know what is happening to your portfolio (and where it could do better) in order to capitalise on potential returns.
4. Inability to move on
Investment is not a competitive sport and you don’t have to hold on to every investment because you decided to take it on. Some of your investments won’t work out and it’s important to know when to cut your losses and take a short-term hit rather than jeopardise your long-term plan.
5. Not understanding the investments you are making
Trends come and go and there are often individuals who would happily advise you on the latest ‘hot’ investments. If you don’t trust their knowledge or expertise and if you don’t understand what you are investing in or why, you could run into trouble at a later stage. It’s best to understand your portfolio choices – if you don’t have the required knowledge, have your financial adviser explain them to you.
Need help managing your investment portfolio? Work with one of our wealth managers – they will take your overall financial plan (from insurance to investment management) and match it to a portfolio that achieves your objectives. With TRG, once properly positioned, your portfolio will be managed on a discretionary basis, ensuring that your wealth is actively managed at all times.