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  • Writer's pictureDarren Pestell

Investment Mistakes to Avoid

Updated: Jul 10, 2023

"Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas." — Paul Samuelson

Building up a pot of savings is one of the fundamental first steps of financial planning, providing you with the financial resilience required when life changes unexpectedly.

Meeting our long-term financial goals and the opportunities that creates for us is what investing is all about. Whilst everyone’s objectives will be different and their attitudes to risk will guide the investments made, there are some common mistakes that, if avoided, could help you keep your progress on track.

Investing is about the long-term

Investing for the long-term gives your money the greatest chance of growing in value as time is the single greatest influence on how

investments perform. Whilst there are no guarantees, the longer your money is invested the greater the chance to benefit from long term growth, particularly if gains are reinvested and multiplying over time.

The ISA allowance is for everyone

Utilising your annual ISA allowance (currently £20,000) does not mean you have to be rich to make good use of it. Investing, even small amounts, over a sustained period will help make the most of the tax allowances you have. Remember that the allowance is per individual, available annually and if you don’t use it, you lose it.

Diversification is key

Whilst the origins of the phase “Don’t put all your eggs in one basket” may date back to the 17th century, this golden rule is as true today as it’s ever been. Ensure you hold your investments in a wide range of asset classes, geographically and sector split, and in line with your individual risk profile. Constructing a balanced portfolio that reflects your risk profile and ethical feelings is key to a successful investment strategy.

Managing the cost of your investments

There can be numerous charges involved in investing, from adviser charges, fund charges and platform charges. It’s important to pay attention to the level of charges you’re paying and to be clear about what you’re paying for. As always, it’s about finding the balance between the costs of your investments and the appropriate level of advice you require and types of investment you wish to access. Having the input of a professional advisor can help you find access to competitively charged investment solutions that are appropriate for your individual circumstances.

Tinkering with your investments

Modern technology can make real time access to our investments easier than ever before, and whilst generally a good thing, try not to be consumed by daily investment performance. Spending too much time monitoring performance, can lead to hasty decisions. Getting professional advice to develop a long-term investment strategy, appropriate for you and reviewed at regular intervals offers the greatest chance of meeting your goals.

Important information – Tax treatment depends on individual circumstances and all tax rules may change in the future. The value of investments and the income from them can go down as well as up, so you may get back less than you invest.

If you’d like more information or a review of your existing investments get in touch for a FREE initial consultation so we can build a plan together for your financial future.

Our services relate to certain investments whose prices are dependent on fluctuations in the financial markets beyond our control. Investments and the income from them may go down as well as up and you may get back less than the amount invested. Past performance cannot be used as a reliable prediction of future performance.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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