Most Common Investment Mistakes Revisited
I have been in the business of helping people with their investments for 30 years now and time and time again I get people coming to see me with problems or losses with their investments and feeling very foolish about their investment decisions. Here are the most common mistakes made by investors:
1 – Lack of Diversification (or putting all your eggs in 1 basket)
This is still the most serious mistake I come across. Making a poor decision about some of your money can be disastrous, but losing all of it is devastating. It happens more often than you would think. Any adviser worth his salt would make sure that his clients’ money is diversified in some form. Just imagine losing ALL your pension fund because a single company or investment fund has gone bust. I have come across people who are in this situation and the impact on their lives is indescribable.
2 – Not Reviewing On A Regular Basis
This is especially common. Rules and regulations change constantly, especially around tax. Also, your personal situation may change. The most common one in Spain for expats is the change from being a UK fiscal resident to a Spanish fiscal resident. When in the UK things like ISA’s TESSA’s and PEP’s were very tax efficient – in Spain that is not the case and can burden holders of such investments with very large unexpected Tax demands.
3 – Rushing A Decision
Never feel pressured into making an investment decision. This will often lead to regret. If someone is making you feel pressured, always step back. If there is an offer or inducement to make a commitment by a certain date and you are not 100% comfortable, get a second opinion. Missing out on that extra half a percent or free iPad if signing up ‘now’ is not worth sleepless nights a rushed choice would give you. There will always be another offer just around the corner.
4 – Too Good To Be True
Investments offering returns guaranteed to pay 8% or 10% per annum or even 2% per month in the current climate WILL have some clause, catch or risk attached in the small print. Always get an experienced Financial Adviser to check out the terms and conditions before signing up.
5 – Getting On The Gravy Train
A great example of this would be those that invested in Bitcoin or Crypto currency at the end of 2017 when the values hit their heights. Yes, people did make staggering amounts of money, but jumping in trying to get in on the act would have been disastrous for anyone in early 2018. The average of the top 10 Crypto currencies fell by over 80% during 2018. Bitcoin itself dropped from over $20,000 to less than $4,000 during that period*. Since then the price of a Bitcoin has rocketed to $60,000 before falling to below $40,000 when Elon Musk tweeted he wasn’t going to use Bitcoin anymore. This is obviously a high-risk and volatile investment type and a Financial Adviser would explain this to you, so you are fully aware of the pitfalls and normally does not constitute as financial advice. The younger generations seem to be getting more and more involved in this type of investing via easy-to-use Apps – older wiser heads should make an effort to make sure no-one in their family makes an uninformed decision in an effort to get rich quick.
6 – I Saw It On Facebook
In years gone by this category would have been called ‘My mate in the pub said’. Hearsay is so dangerous. Social Media, friends, taxi drivers etc do not know anything about you. A Financial Adviser will complete a factfind, discuss your risk profile, understand your objectives and be qualified to provide personalised advice in the form of a comprehensive report explaining his advice. Your friend on Facebook or mate in the pub might have struck it lucky, just exaggerating or even not understand what he is talking about, yet can provide overwhelming and compelling arguments about their investment success.
If you can avoid all the above when investing you are half way to making a sensible choice. It is usually best to get a second professional opinion of any investment decision.
If you want more information or wish to make an appointment to discuss your own situation then call Keith on 657 684 094 or email email@example.com
120 Avenida Dr. Artero Guirao 2C
San Pedro Del Pinatar
Our office suite is easy to find on the main N332 through road of San Pedro del Pinatar with easy parking.
Blacktower Insurance Agents & Advisors Ltd is authorised and regulated in Cyprus by the Insurance Companies Control Service and registered with the DGS in Spain.
Blacktower Financial Management (Cyprus) Ltd is authorised and regulated in Cyprus by the Cyprus Securities & Exchange Commission and is registered with the CNMV in Spain.
*Data used in this article can be found on xe or any other currency converter charts
This communication is not intended to constitute and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity.