Common Investor Mistakes to Avoid 👎

Join Ebeth Van Heerden, Head of Investment Distribution & Intermediaries, and Paul McKeaveney, Portfolio Manager at Investec Investment Management, as they guide you through today's unpredictable market. They share expert tips on pitfalls to avoid and why sticking to your investment plan is crucial.

We listened to their podcast and identified the most common mistakes that investors make. Here's what stood out to us.

1. Avoiding Impulsive Actions Many investors fall into the trap of making emotional decisions when the market fluctuates. Acting out of fear of missing out (FOMO) on gains or selling in a panic during downturns can lead to less-than-ideal investment outcomes.
   
   "Often, I think the biggest mistake we see clients make is through this indecision of uncertainty. Because we don't know which way to go, we often do nothing. And that in the long term is the most debilitating consequence for investors because they miss out on the great power of compounding interest. It's not about timing the market—knowing when it's the right time to invest or the wrong time to invest—but just staying invested that counts at the end of the day. This approach gives you the power of compounding interest and gets your money making money for you."
   
   
2. Lack of Research and Due Diligence: Another common mistake is diving into investments without doing enough research. Rushing into decisions without understanding market basics, company performance, or economic trends increases the risk of financial losses.
   
   "Identify your goals. Get the right plan in place, get the right instruments in place to to get you there, then invest and forget about it. Don't switch every time the market goes up or down."
   
   
3. Prioritizing Short-Term Wins
   Focusing too much on short-term gains without considering your long-term financial objectives is a pitfall many investors encounter. Short-term market ups and downs might tempt you to stray from your long-term strategy.
   
   "You know, one factor is the ability to allow your investments to compound themselves over very long periods of time. And another factor is related to not fiddling around too much and trying to time the market, thereby interrupting that compounding process.One of my favourite phrases that a colleague highlighted to me on compounding was made by Benjamin Franklin, who captured the meaning of compounding as money makes money and the money that money makes makes money."
   
   

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