How to avoid Investment Mistakes

Living East Tennessee

John Fawaz, certified financial planner shares the biggest mistakes to avoid with investments.

Letting fear and panic dictate your investments decisions: The stock market has been volatile to say the least this year. The return of the market historically has been close to 10% but the average investor’s return has been less than 3%. The reason is when the market are doing well everyone wants to invest and when it is not doing well people are bailing out. It should be the opposite you want buy low and sell high not the other way around. You should also keep a long term perspective

No diversifying and chasing whatever is hot: You should not invest more than 5% in any one sector or one stock. People are shying away from international stocks because they are not doing well. If gold does well one year people start pouring all their money into gold. You should be balanced and invest across the board from Cds, Bonds, Commodities, Real Estate and Stocks. Never put all your eggs in one basket!

Avoid fancy investment dinners: There at lots of vendors doing investment dinners where they invite you to Ruth Chris, Flemings and high end restaurants. The investment professionals hosting those events end up spending thousands of dollars to get 15-20 people to attend. The only way for them to recoup their investments is to sell high commission products like Index annuities.

Not educating yourself: People spend more time planning a vacation than their retirement. You should never invest in anything you don’t fully understand. If you lack the knowledge you can take courses online, at UT non-credit or buy books. The more knowledge you have the better the investment choices you make.

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