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We all make mistakes. But when it comes to investing, mistakes can hurt your ability to grow wealth over time. So to help you stay on track to meet your financial goals, we\u2019ve put together a handy list of 10 common investment mistakes and how to avoid them.<\/span><\/p>\n Before you start investing, it\u2019s vital to have a clear goal in mind. For many people, it\u2019s financial security in retirement. For others, it\u2019s a college fund for their kids. And for some, it\u2019s simply a lump sum that they can use to create more opportunities for themselves and their families as life progresses.\u00a0<\/span><\/p>\n The time horizon you\u2019re working to will have a direct impact on the risk profile of your investments, so whatever your goal, it\u2019s helpful to sit down and formalise it in advance. One way of doing this is with a <\/span>Systematic Investment Plan<\/span><\/a>.<\/span><\/p>\n Markets go up and down. By focusing too much on short term performance, you risk missing out on the underlying growth in markets that drives wealth creation. Between 1980 and 2015, the S&P 500 fell on average 14.2% at least once per year, but nonetheless ended up delivering a positive return in 27 of the 36 years. <\/span>The market was positive 75% of the time<\/span><\/a>, demonstrating that downturns don\u2019t last forever and markets tend to make back their losses over time.\u00a0<\/span><\/p>\n It takes patience and perspective to zoom out and take a long-term view on the market. This is a skill, one that takes practice to perfect.\u00a0<\/span><\/p>\n Excessive fees<\/span><\/a> charged by brokerages and traditional investment advisors erode your investment returns and wreak havoc on your ability to build wealth through the power of <\/span>compound interest<\/span><\/a>.\u00a0<\/span><\/p>\n Your first priority as an investor should be finding an investment platform that enables you to invest in a way that\u2019s low cost, efficient and easy to manage. Robo-advisors do precisely this, and <\/span>Sarwa<\/span><\/a> is leading the charge for investors in the Middle East.<\/span><\/p>\n Even the most successful professional fund managers struggle to time the market. Truth be told, the number of variables at play when investing in stocks makes it almost impossible to know when to buy and sell on a daily basis. Trying to time the market also leads to increased transaction costs, which eat into your returns.\u00a0<\/span><\/p>\n So, <\/span>market timing is best avoided<\/span><\/a>. Instead, seek to automate your investments to ensure you remain invested over the long term and restrict your ability to make counter-productive adjustments to your portfolio. <\/span>Time in the market<\/span><\/i> is what matters.<\/span><\/p>\n Human beings are emotional creatures. But <\/span>emotions and investing don\u2019t mix<\/span><\/a>. When we let emotion into the investment process, it typically leads to bad decisions.\u00a0<\/span><\/p>\n When markets are falling, we might become fearful and panic sell investments that have the potential to perform very well over the long term. Likewise, when markets are skyrocketing, we might take undue risk by committing too much capital into investments that are flavour of the month.\u00a0<\/span><\/p>\n Again, by automating our investments we can mitigate this problem and remove emotion from the investment process.\u00a0<\/span><\/p>\n There are many great investment advisors out there. There are some bad ones, too. In order to succeed with your investments, it\u2019s critical to find the <\/span>right advisor for you<\/span><\/a>.\u00a0<\/span><\/p>\n We\u2019re all different, and some people have highly bespoke needs when it comes to investing. But the vast majority of people will benefit from a <\/span>low cost, automated approach to investing<\/span><\/a> that gives them exposure to long-term growth in markets whilst keeping fees to a minimum.<\/span><\/p>\n Risk is a funny thing. Too much of it, and you might harm your returns. Too little of it, and you also might harm your returns! Understanding your risk appetite is an important element of investing, one that can help you stay calm and invested in markets over the long term. As <\/span>entrepreneur Omar Al Busaidy<\/span><\/a> says,<\/span> \u201cKnow your risk appetite. If you prefer to play safe, risk little but earn a consistent return then do so. Don’t be swayed by a sudden trend or the investment choices of other people.\u201d<\/span><\/i><\/p>\n The best investment advisors and platforms take time to understand your risk appetite and construct an approach that\u2019s right for you.\u00a0<\/span><\/p>\n If there\u2019s one sure-fire way to lose money, it\u2019s <\/span>buying high and selling low<\/span><\/a>. But this is surprisingly easy to do, since people often become attracted to stocks when they have performed well in the market. By the same token, it\u2019s tempting to sell stocks when they have fallen in price, rather than adding to positions in order to take advantage of cheaper prices.\u00a0<\/span><\/p>\n Rather than getting sucked into this destructive pattern of behaviour, try to ignore the highs and lows and focus on investing over the long term.<\/span><\/p>\n Risk is inevitable when investing, but it can be managed.\u00a0<\/span><\/p>\n One way you can lower the risk of your portfolio is by using <\/span>diversification<\/span><\/a>. By not putting all of your eggs in one basket, you give your investments a better chance of growing over time.<\/span><\/p>\n Traditionally, diversification was a time-consuming process that involved juggling multiple investments. But now technology makes it easy.<\/span><\/p>\n Perhaps the most common mistake when it comes to investing is not starting at all.\u00a0<\/span><\/p>\n To the uninitiated, investing seems complicated, unaffordable and intimidating. But it doesn’t have to be that way. Investing is a journey, and all journeys start with a single step. For some, that might be picking up the phone to talk with an advisor. For others, it might be visiting a website and filling out a form.\u00a0<\/span><\/p>\n Robo-advisors like <\/span>Sarwa<\/span><\/a> make it easy to get started and manage your investments going forward. So <\/span>get in touch<\/span><\/a> if you\u2019d like to find out more.<\/span><\/p>\n\n
No clear investment goal<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Too much focus on short term performance<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Paying too much in fees and commissions<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Trying to time the market<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Letting emotions affect your decisions<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Going with the wrong advisor<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Not understanding your risk appetite<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Buying high and selling low\u00a0<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Not diversifying investments<\/b><\/h2>\n<\/li>\n<\/ol>\n
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Failing to start<\/b><\/h2>\n<\/li>\n<\/ol>\n
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