There are couple of investment mistakes one should avoid in order to maximize their portfolio return. Following are the mistakes that are common among investors
Over exposure in one asset class
One should never put all their eggs in one basket, it is always advisable to diversify your financial portfolio by investing in more than one asset class . For example, one should invest in equities, debt and real estate to have a balance portfolio. Most Indians have over exposure in real estate & debt products and poor exposure in equities which should never be the case. To make a sizable gains from one’s investment portfolio there is need to make right amount of equity investment. It should be noted that fixed deposits, real estate and gold are almost similar in nature, as over a long period of time all three asset classes perform at par with inflation.
Delaying decision to invest
Most people tend to postpone their investment decision till the end of the financial year when Mar 31st approaches. This is wrong as it leaves you with less time to think as well as plan your investment in an appropriate manner. Also, people wait for right time to invest which they define as a next promotion, a better salary or also a good raise. It should be noted that investment decisions should not be postponed. Money in your savings bank account earn only an interest of 4%, whereas if invested can earn anything from 14% to 16%.
Looking for shortcut
One can make significant gains from investing in systematic plan but instead they consistently look for new companies/shares to invest with a hope of making a windfall gains. This results in investing in risky stocks as well as over diversification of portfolio resulting in substantial losses for the investor. Also, investors continue to be lured by new types of Ponzi schemes which offers to double or triple the money in a short span of time. These new innovative investment scheme scams should be avoided.
Don’t perform Periodic review
Reviewing and analyzing ones investment portfolio is very important, most individuals skip the process, in turn losing money. A holistic view of the assets one has and taking corrective measures at the right time is what is required to keep the investments healthy. It is imperative to note that reviewing your investments once a year is advisable, as this helps you to keep a check on what asset classes are performing and which are giving a negative return. If you notice negative returns you may want to switch your investments.
In the end, I would like to highlight that the above mentioned investment mistakes to avoid in 2016 will help you in achieving your long term investment plans. You just need to stay focused on your investment path.