Avoid These Simple but Common Investing Mistakes
Investing seems daunting, but it’s actually quite easy when you start. Of course, you can still be wrong, and these errors can get expensive. Here are a few of the most common ones to avoid.
Openfolio is a website where you can compare your investment strategy with others . They analyzed the performance of their 3,000 public users (you can make your profile private on the site). They then compared these metrics to an equivalent user trust fund. The deadline fund offers a standard rate of return on a specific time frame.
Simply put, Openfolio compared how much these investors could have made from investing with how much they actually made.
Of those investors who did poorly, they found a few common mistakes:
- They have invested in individual companies, exposing themselves to higher volatility.
- Because they did not diversify into funds and ETFs, they invested less in the broader market.
- They had too much cash and therefore underinvested.
Openfolio reported:
“We found that more than half of our users did not meet their average profit target at retirement of ~ 7%, and that 24% of users lost money in 2014 . This is the year the S&P 500 is up 13.6%. ”
Of course, their method is flawed. For example, it doesn’t necessarily measure performance over time. Perhaps these particular portfolios have bounced back over the years. However, Openfolio’s findings are in line with the advice most investment professionals give : Invest in broad funds and make sure you diversify.
Check out their full post for more details.
Are you making these simple mistakes? | Openfolio