Investment Common Mistakes
Investment mistakes are easy to make. We hope these pointers will show you what not to do. Take a look at the ‘Investment Tips’ section, which will guide you through the ways to avoid mistakes.
Mistakes People Make
• Holding onto a with profit bond purely because there is a penalty for encashing.
• Using an insurance company’s ‘managed’ fund.
• Not reviewing investments on a regular basis with an adviser. As a result, what was a balanced portfolio at the time of set-up, can quickly become unbalanced.
• Couples can often have assets held in the wrong way and pay unnecessary tax that cannot be reclaimed.
• Insufficient available cash is left in emergency funds.
• Taking excessive risks with investments to achieve a potentially higher return, when an overall “helicopter” view has to be taken to help spread the risk.
• Buying investments off the page, or through different parties which takes you away from a cohesive “financial strategy plan” and leaves you with a lot of unconnected purchases and no protection from poorly designed products.
• Investing in the top fund of the month, quarter or the year. In the investment world, it is important to look for a longer, steadier track record as you are not investing for the short-term.
• Investing too soon. If you have debts to pay, clear these first.
• Many investors get caught chasing the dream and put all their eggs in one basket, such as Technology funds or Gold investments.
• Investors are often told to use onshore investment bonds. These are tax-inefficient and pay 20% tax as they grow. An equivalent is an ISA or unit trust could be tax free if within the capital gains allowance.
• People buy when markets are ‘good’ (high) and sell when they are ‘bad’ (low), this is the reverse of what you should do.
• Holding multiple funds in various places causing administrative havoc and valutaion problems.
• Most investors don’t know the underlying risk within their investments until markets collapse.
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