Jul 08 2008
Biggest Mistakes Made by Investors
Listed below are a few of the biggest mistakes made by investors and I have made a few myself.
- Failure to save sufficient dollars early enough in life to allow compounding to take full effect
- Buying on a whim or rumor from the “local expert” or friend
- Trade investments too frequently or lack of patience
- Not realize the importance index funds can play in developing a well-diversified portfolio
- Lack of understanding of academic research showing the importance of value oriented investments
- Paying attention to all the bad advice that comes from the media, particularly TV
- Lack of understanding of what it means to develop a well-diversified portfolio that includes REITs and international markets
- Thinking stock selection and market timing are the ways to outperforming the benchmark
- Inadequate portfolio tracking system
- Trying to find the latest best performing mutual fund
- Inadequate benchmark tracking system
- Lack of understanding of the meaning of risk
- Not knowing how to control expenses
- Lack of investment plan and how to go about constructing a portfolio
This blog, particularly the Premium Content side, is to guide the beginning and advanced investor around these “tar pits.” While the ITA Wealth Management blog is not the Holy Grail to investing, it is a clear and concise method for building a well-diversified portfolio with a long-term plan in mind. Passive investing through the use of ETFs or index funds is not exciting and it is not going to generate party conversation. In fact, it is a rather boring approach to investing.
The “ITA Wealth Management” way is not going to move one to the top of the performance list, nor will one end up on the bottom. Instead, it is a way to create a portfolio that over time will begin to move one above 75% to 90% of the investors if one is willing to stick with the plan. Patience is very essential if the “ITA Wealth Management” plan is to work.
Lowell Herr
Photograph: Athens, Greece
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