Avoiding common investing mistakes is a crucial key to success in long-term investing, since it can take years to recover from a costly error, both financially and emotionally.
But if you have made a serious investing blunder, don’t feel bad — you’re not alone. Even millionaires have been able to put financial missteps behind them on their path to wealth.
Here are the top five most frequent investment mistakes by millionaires, according to a new survey:
Failing to adequately diversify their portfolio (23%)
Investing without a plan (22%)
Making emotional decisions (20%)
Failing to regularly review the portfolio (16%)
Focusing too much on past performance (14%)
According to a poll of global high-net-worth clients from deVere Group, other common errors include investor impatience, investing near the top of the market, acting on tips from friends and family, and paying unnecessary taxes.
“Avoiding just one of these mistakes – and there are many others – can literally make the difference between poverty and financial freedom,” said deVere CEO Nigel Green.
The growing field of behavioral finance has identified several key human biases that cause investors to make the same mistakes over and over again. The idea is that instincts that helped our ancestors survive and adapt in the jungle actually work against us when it comes to investing.
At Covestor, we’re committed to helping investors avoid these common mistakes that can prevent them from reaching their financial goals on time.
As an online investing marketplace, we give investors the opportunity to diversify with a selection of more than 140 portfolios run by active managers that invest across various asset classes. Covestor also oversees multi-manager strategies that provide access to several portfolios, with just one purchase.
Our marketplace is completely transparent, giving investors the ability to research managers and view the historical performance of their portfolios. Covestor also presents risk-adjusted performance to help investors avoid the mistake of focusing too much on past returns and potentially choosing a portfolio that’s too risky for their goals and risk tolerance.
Many individuals who use online investment advisers are comfortable with the digital format and using the Internet for research. However, for investors who want some human interaction, Covestor has client advisers that investors can call for help with choosing portfolios based on their goals and objectives.
DISCLAIMER: The information in this material is not intended to be personalized financial advice and should not be solely relied on for making financial decisions. All investments involve risk, the amount of which may vary significantly. Past performance is no guarantee of future results.