Avoid the top investing mistakes

With markets experiencing some improvement, you have probably been wondering how best to reinvest your money. However, you certainly do not want to make the same mistakes you may have made in the past. We advise our clients to protect their money by steering clear of the following top investing mistakes:

1. Not setting clear goals.
   
   The "why" of your investing is almost, if not the most, important question to ask before you start to invest. Always have a clear vision of what you are saving for and how much you need. Is it for retirement? A house? A car? Will you need to use your money in five, ten, or 25 years? You need to know the answers before you invest. Then you can choose investments that best fit your situation, risk levels, and need for liquidity. For instance, if you will need your money soon, you may want to choose safer investments.
   
   
2. Placing all your money in one type of investment.
   
   This can be a big gamble. We always say that a mix of investments usually works better to decrease risk, since if one loses, another may gain. Remember, a number of businesses have cycles. Some may do well in the summer, some in winter. Some may react to world events; some may not. If you put all your money in a single investment (no matter how good it seems), and something goes wrong, you could lose your money.
   
   This error can be avoided by investing in one or several mutual funds. With mutual funds, your money goes into a mix of investments. And over time, the critical factor is that your investment mix will most affect your results.
   
   
3. Investing in things you don't understand.
   
   If you don't understand how an investment provides a return, how a business is organized, or how it makes money, you need to either learn more about it or consider avoiding it. Also, make sure you understand the conditions that can make the price of an investment rise and fall. This will help you decide whether an investment is a good choice for you.
   
   
4. Taking chances you can't live with.
   
   Don't invest in something that makes you lose sleep at night from worry. Most people are more comfortable with investments that they don't need to watch every day. If you're going to take chances, make sure you only invest money you can afford to lose.
   
   
5. Following hot tips or rumours.
   
   What looks like great information may just be noise, or worse, a false rumour. Make sure you trust the source of the information you are basing your decision on. If you are looking for advice, get it from an expert. That's doing your homework.

Other common investing mistakes include:

• becoming too comfortable with a good investment
• hanging on too long to a bad investment
• trying to rush results
• trying to time the market
• chasing the success of others
• having no sell or rebalancing discipline for each investment holding

Remember: You can avoid all these common mistakes
If you set clear goals and do your homework carefully, you'll have a better chance of success

If you would like to review any of this information or simply go over your investment portfolio, please feel free to contact our office for a consultation.