1. Unclear Investment Goals:
Are you planning for retirement, buying a house or saving for your child’s education? Different goals may
require different investment strategies. Failing to plan is planning to fail.
2. No Long Term Strategy:
Investing is a long-term process. Attempting to buy and sell with perfect timing is not only impossible - it can also cost you a lot of money. Long-term strategies may not make you a millionaire overnight, but they won’t bankrupt you either.
3. Lack of Knowledge:
Investing first, then learning about your investment, is putting the cart before the horse. The results can be hard to swallow. Check First - there are many sources of information to help you learn about the investing process and specific investment vehicles.
4. Overestimating Your Abilities:
If it were possible to consistently beat the market, analysts and brokers would all be millionaires (they aren’t). Don’t overestimate your abilities or those of your adviser.
5. Improper Investment Diversification
Trying to eliminate risk by choosing too many investments can destroy opportunities for good returns.
Conversely, having too few investments or focusing on one industry sector will significantly increase your risk.
6. Following “Hot” Tips
Building wealth takes time, patience, and discipline. “Hot” tips are often from uninformed sources and based on misinformation. By the time you get a tip, it’s often too late and the opportunity has passed. NEVER buy an investment based solely on a tip.
7. The “I like their Products” Philosophy
They may make your favourite beauty product, snack, or vehicle, but that doesn’t mean they are a well-run, profitable company. Research is the only way to find out how good a company really is.
8. Doing the wrong thing at the wrong time
Buy low. Sell high – it’s sage advice for making money. If you have a good investment plan, there’s no need to panic when markets fall. Spend the time to make a plan and stick to it through the downturns – they’re often a great time to buy rather than sell.
9. Taxes? What Taxes?
Taxes play an important role in investment planning. Different investments are taxed differently. Involve a
qualified professional to speak about Canadian taxation in your financial planning process.
10. Risk? What Risk?
There are many types of risk that can affect an investment. Even guaranteed investments have some
risk. Your investment objectives will help you determine how much risk you should take.