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Avoiding Investment Mistakes

Making mistakes is a part of life. The key to success is learning from them.

That saying applies to investing as much as anything. It’s easy to get caught up in today’s compelling story and overlook the most common behaviours that can get us into trouble and leave us straying from our goals.

Whether it is the pain of poor short-term performance or envy of our friend’s/colleague’s apparent success or fear of missing out, we can become incentivised to behave badly as investors.

This week we share some perspectives (via 3 articles) of why we keep making the same mistakes and how we can learn to take a longer-term view.

  1. Not acting

In tough markets, investors often are tempted to “do something”. But that urgency to respond to short-term noise can lead to unforced and avoidable errors as an investor. The alternative is having a plan that’s built to work, that you can stick with and that builds in the possibility of periodic bad performance, as this writer explains.

2. Twelve Common Money Mistakes

If you continue through life making the same mistakes, don’t be surprised if you don’t get different results. This applies to money decisions, as much as to anything. In fact, some of these mistakes are so common they are worth recording for prosperity. This article lists 12 of the most common money mistakes and how to avoid them.

3. Repeat offending

Concentrated portfolios, failed attempts at market timing, being swayed by the latest fad – why do investors keep making the same mistakes? Part of the reason is that memories of past mistakes fade and we’re naturally drawn to stories that make it seem as if it really is different this time. A behavioural finance expert explains.

If you need investment advice or a review of your portfolio, please feel free to reach out via yves@affluenceprivate.com.au


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