Simon's "1 Minute Money Message" (Episode 11): 3 Common Investing Mistakes

Welcome to Episode 11 of "One Minute Money Message" where Simon will outline Simple Ideas to Grow, Protect and Manage Your Wealth.

"Investment in knowledge pays the best interest"

That's quote by Benjamin Franklin.

So what are three common investing mistakes that people make?

Number One: trying to time the market.

So you might be, as an investor, attempting to cash out to avoid a predicted downturn.

But accurately forecasting the direction, the timing, when to buy, when to sell is a complete guessing game.

Even if you miss a brief period of that recovery, if you do manage to get out before a crash over time, you know that can just really leave a lot of money on the table

Number Two: focusing on the headlines.

So investors often fall in love with particular stocks or themes, often based on media hype or attention or recent performance, and tend to concentrate their investments or portfolio in those stocks.

Great example in recent times would be the large tech companies in the US, also known as the Magnificent 7.

If you look at research done over many periods of time throughout history, on average it shows that companies that outperformed the market on the way up failed to outperform in the years after they make it to the to the top ten list.

So that the takeaway here is instead of letting up on a handful of stocks that have dominated the market, try and own as many as broad a basket as possible through like a mutual fund or an ETF.

And diversifying across industries and, and global markets and regions can help reduce that risk.

And also position you as an investor to potentially, you know, capture the returns of, of the future top performing companies

Number Three: chasing performance.

So you might pick a fund based on its past returns that's done well, and expecting that continue to deliver and outperform.

But again, research shows that most funds ranked in the top 25% looking back on a five year return basis didn't remain in the top 25% in the next five years. In fact, only about one in five equity or stock investing funds remained in that group.

So the takeaway here is wouldn't be using past performance as an investment decision tool, doesn't give you a lot of insight into how the future would look from that fund.

On that note, if you'd like help drafting a customised investment strategy or a chat about your general financial planning needs, feel free to book a call on our website button or request a copy of our Investment Policy Gold Pilot tool, which is a DIY way for you to build your own investment policy.

Thanks for watching!

Simon

p.s/ - If you'd like to check out previous episodes of "1 Minute Money Message" click here!

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