Investment Articles

Common Investment Mistakes

Over the years we have met people making nearly every investing mistake. We list some of the most common mistakes below. If any of these sound familiar and you would like to learn about solutions to remedy these mistakes, please contact us.

1. Over Concentration

The biggest mistake we see is inadequate diversification.

Too often, we find portfolios that are highly concentrated in a single sector such as technology, or single asset class such as term deposits. Concentrated portfolios lack adequate diversification, which can mean greater risk and volatility in the portfolio.

2. Pessimism

Time after time, we have found that the markets surprise us on the upside.

Easy to say coming with 2003 providing one of the worst international share market performance since the 1930’s but equity markets tend to reward patient investors over time. As Warren Buffett said “People would rather be promised a (presumably) winning lottery ticket next week than an opportunity to get rich slowly.” Adam Smith, “The Modest Billionaire,” Esquire, October, 1988 p 103.

3. Short Term thinking

Investing in shares is not for the impatient.

One of the worst mistakes is to conclude that investments in a share based investment or a portfolio with exposure to equities should be sold because it has not performed over the last 12 months or even less. Investments are long-term investments and should be selected on their potential over five years or longer.

Additional Resources - March of the Markets

March 2007 (PDF, 560KB)
October 2006 (PDF, 200KB)
March 2006 (PDF, 80KB)
October 2005 (PDF, 50KB)
April 2005 (PDF, 1.40MB)
September 2004 (PDF, 50KB)

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