We’re all human, and we’re all prone to mistakes. So even if you’re an experienced investor, you may be falling prey to some investing pitfalls. Often, these mistakes are hardwired into our natural thinking, so you may not even realize you’re undertaking them.
With that in mind, here are some mistakes that even experienced investors can make:
Loving a stock or a company
Almost everyone has a company that they’re passionate about for various reasons. Maybe you’re strongly zealous of the firm you work at, or you’re fanatical about a company’s mission – the reasons are endless.
When this passion gets roped in with an investment plan, this becomes one of the biggest mistakes that even experienced investors can make. For instance, investing heavily in a company because of their mission can completely throw off asset allocation, and result in concentrated (and unnecessary) risk.
To avoid this mistake, you’ll need to stick to a strategic asset allocation, regardless of your personal attachments to investments. If you’re having difficulty with this, it’s well worth it to consider an unbiased financial advisor who can help.
Timing the market
We’re all investing to watch our wealth grow, so timing the stock market in the pursuit of increased profits is one of the mistakes that even experienced investors can make. After all, fleeing when investments are doing poorly, or chasing investments that are doing well, follows some of the most basic and ingrained logic in human nature.
Although it seems counterintuitive, sticking to your long-term plan can result in more profits than attempting to time the market. Numerous studies have shown that timing the market rarely works, and that investors would be better suited by sticking to their strategic plan.
Learn more about avoiding the mistakes that even experienced investors can make
At LexION Capital, our fiduciary advisors have decades of practice helping clients avoid investing mistakes. Our investment decisions are backed by Nobel-prize winning academic research, and by design our fiduciary advice will always be in your best interests. If you’d like to learn more, don’t hesitate to schedule a conversation with us today.
