High-net-worth-investors have revealed the major investment mistakes they made before seeking financial advice as per a new global poll. The survey was conducted by the deVere Group (one of the biggest independent financial advisory firms globally).
The number one quoted mistake (27%) was a failure to correctly diversify portfolios. The other mistakes were not having started to invest before (23 percent), concentrating on the short-term (20 percent), getting emotional while investing (15 percent), and not having maintained sufficient cash in reserve (8 percent). 7 percent of the participants did not know or did not respond.
The sample consisted of 656 clients of deVere (spread across the UK, Africa, Asia, the US and the Middle East) who have investable assets worth over £1m (or the equivalent).
According to Nigel Green, deVere Group CEO and founder, “All serious investors, including myself, have made previous investment mistakes that could have been easily avoided.”
A prudent investor would seek professional advice from an independent adviser. This would ensure that most of the basic investment mistakes can be avoided by high-net-worth-investors.
All this would make it appear that investing is risky. However, nothing could be further from the truth. Not making any investment could possibly be very dangerous in the long-term.
Some of the wealthiest people globally are dedicated investors. An investor must be sensible, seek proper advice, and learn from others mistakes.
One of the fundamentals of successful investing is to ensure the portfolio is properly diversified. However, it is surprising that most of the investors fail to do this.
Managing a well-diversified portfolio across different asset classes, sectors and regions ensures an investor would be able to mitigate risks and leverage critical opportunities.
Even seasoned investors focus on the short-term results, which involves higher risks, compared to investing over a longer period.
Stock market performance can be more easily forecasted in the long-term. Hence, investing in equities is accepted globally as one of the best methods to accumulate wealth over long periods.
Making decisions based on emotions and loyalty could be commendable traits in most parts of life – but not when it comes to investing.
Investment decisions on the basis of emotions could be harmful. Objectivity is the vital factor. Again, it is always advisable to have some cash and use it, if a clear trend or opportunity exists.