When it comes to successful investing it isn’t always about how much money you are making, rather how much you are keeping. Keeping your losses to a minimum allows your assets to potentially grow over time through a technique called compounding.
You must find ways to keep your overall portfolio from losing value or hindering the growth of your assets. Below are some tips to avoid when it comes to keeping your assets and maintaining control over the outcome of your portfolio:
Deciding on only one fund
The risk you run by investing all of your assets into only one fund or security is that your investment could tank and your portfolio could become scrambled.
What you should do is choose a variety of funds and securities. Although, this strategy doesn’t guarantee you won’t lose money, you can still manage risk better by spreading assets amongst different investments and asset classes.
Timing the market
Many investors find themselves fully invested in stock funds when the market is rising. As soon as these investors see the stock fall, they jump quickly into cash equivalents. This strategy will only work if the investor knows exactly when the stock is going to fall. They also need to know precisely when to buy back into them.
Buying winners from past years
A big mistake investors make is buying stocks or funds that did well the previous year. In reality, there are too many factors that can affect stock and bond funds in any given year. Some factors include; consumer, interest rates and so on.
There is no sure fire way to tell if history is going to repeats itself. But, you do not want to ignore what happened last year. Winners that have a steady performance and a fund manager with consistent good results are ones to keep an eye on indefinitely.
Short term thinking
Short term investing does not allow your investments time to grow. For certain goals, such as funding retirement or a college education, a short term investment will no fulfill any of these long term needs. Many professionals says it is important in your portfolio to include stocks.
Investing does not come easy. But what makes it manageable is staying educated and avoiding these common mistakes.