Investors often committed 12 errors Money Tips

Category: Money tips Release Date: 2007-05-27

Why do investors lose money? Why do they go away from earnings? Chartered Financial Analyst to help you analysis:

Headquartered in Virginia, Chartered Financial Analyst Institute recently released a professional opinion that the reason why investors often fail, mostly because they often committed 12 errors.

1. Not set investment strategy. USA South Texas Money Management CEO Jane Ninghuai Yate, said: "From the beginning, individual investors should know how much they want to achieve profit and how many are willing to bear the loss." Well-planned strategy should include the time frame , risk tolerance, amount of investable assets, as well as future plans to invest several months, including the number of important factors.

2. Invest in individual stocks rather than diversified portfolio. Invest in individual stocks over the investment has been diversified mutual fund or index of securities investment funds, has come a greater risk. Investors should maintain a wide variety of investment portfolio in order to cover different types of assets and investment. Not diversified investments, will invest in an individual facing a particular stock or industry fluctuations is extremely weak.

3. Investing in stocks rather than the investment company. Sigma Investment Advisors president of the United States鲍勃比尔基argue that the mere performance of the market, or a company's product or service to buy some sort of personal preference shares, destined to be a money-losing approach. In addition, investors should also investigate the corporate governance, to make sure that it can ensure that the basic corporate governance, will help you to avoid future trouble.

4. Expensive to buy. TAL Private Management Company of Canada Beth Hamilton - Kim pointed out that the reason why investors would commit such a mistake, mainly due to "chase performance."

Cisco's investment adviser Scotia, Canada's Kathy Kassel Rockwell also take the same view. He believes that "too many people invest in those in last year's impressive performance in the past few years, or a certain category or some assets, that is because these assets performed well in the past time, so in the future will show very well. This is kinds of point of view is absolutely wrong. "Takeweier emphasis should always be strictly focused on the investment outlook, not just past performance.

5. Sell it. Detroit Free Press business reporter Rajiv Wayans said, "Too many investors in a loss to make up for not willing to sell their shares, arrogant, unwilling to admit their mistake to buy shares at high prices."

Chartered financial analysts cautioned investors to remember that not every investment will add value to invest in any one stock to be set up stop-loss line. The best way is to accept the loss and the assets re-enter the more promising investments.

6. Frequently buy and sell. Too frequent trading, more than any other factors that reduce the return on investment. Two professors at the University of California, to a large discount brokerage firm from 1991 to 1996 of 64615 individual investors during the stock portfolio conducted a survey and found that without considering the conditions of transaction costs, these investors an annual return rate was 17.7%, an annual rate of return than the stock market higher by 0.6%.

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But will include transaction costs, investors reduced the annual rate of return to 15.3%, the annual rate of return than the stock market lower by 1.8%. Can be seen that way is a long-term buy and hold strategy, rather than over-active transaction.

7. In accordance with "rumors" to act. Louisville Kentucky, Pat Lennon's托德洛厄尔said, "In considering the investment expertise of the consultants are not seeking contact with the most common mistakes investors." He reminded investors, do not forget their own Bipin and professionals in the investment. These professionals have access to multiple research and analysis team, and sophisticated investors from all the independent channels to collect information and carry out their own unique analysis and research before making a decision.

8. To pay excessive fees or commission. Incredibly, investors are often difficult to make it clear that its investment service providers with details of the fees, including management fees and transaction fees. Wyatt stressed that, as a precondition to open accounts, investors should ensure that the full understanding and each potential investment decision-making related costs. In addition, it should be in accordance with investment income after expenses to determine overall performance.

9. In order to avoidance to guide decision-making. Some investors in some markets continue to value stocks performed well, so that the entire portfolio of securities account for the excessive proportion of the time, was still unwilling to sell shares in order to avoid paying large sums of capital gains tax. There are similar situations, once to a profit opportunity, investors should not worry too much income tax rate and the stock holding time extended to more than a year. Wise approach is simply to find a good tax adviser.

10. Unrealistic expectations. To look at a long-term investment and not let external factors affect your practice, resulting in a sudden drastic change in your strategy. This is very important. CFAInstitute, executive vice president Robert Johnson pointed out that investors should own portfolio performance with the benchmark index for comparison to help individual investors to set more realistic expectations.

11. Ignores individual investments. Investors often simply because they lack the right how to start or where to start from the basic knowledge and can not begin to implement their investment plans. Investors should continue through different means to invest in each market investment, and establish mechanisms for regular input to their investment portfolio. Investors should also be on a regular basis to assess their own property, to determine whether consistent with their overall strategy.

12. Do not know their true risk tolerance, investment is not without risk. The ability to determine risk, including two from the investment portfolio and psychological damage to property measured in terms of potential impact. Typically, plans to develop a long-term goals of individuals willing to take greater risks in exchange for more lucrative returns. However, do not wait until you have a sudden or recent decline in asset value only begin to evaluate your risk affordability.

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