Keep Yesterday’s Investment Mistakes In Mind As You Focus on Tomorrow

Investing should be based on sound principles, but sometimes emotions overrule logic. Being aware of these prevalent financial mistakes may help keep you from tripping up your investment strategy.

Maintaining Unrealistic Expectations
There’s nothing wrong with hoping for the best from your investments it’s human nature. However, you could encounter long-term cash flow problems if you base financial plans on unrealistic assumptions.

Chasing Performance and Overtrading
During the 1990s, most of the new cash that flowed into mutual funds was invested following their best-performing quarters. By the time you hear about a “hot” performer, it may have already put up its best numbers. Rather than hopping from one investment to another, you may do better to devise a plan based on your financial goals, risk tolerance and time horizon.

Chasing past winners is closely correlated with another potential investment mistake overtrading. Shuffling your investments too often may increase the chance that you’ll buy high and sell low. One potential solution: Work closely with a qualified financial professional, who can help you avoid the urge to trade frequently.

Failing to Check Your Portfolio
When was the last time you checked your asset allocation? You might be surprised to find that strong or weak returns in one area have caused a shift in your portfolio that could affect your ability to reach goals or manage risk. Review your account at least once a year to make sure that it remains in line with your investment goals. If not, you may need to rebalance.

Of course investment mistakes do happen, but you can try to minimize their impact. Learn from the missteps of others and consult with a qualified financial professional to start improving your investment strategy today.

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