5 Investing Mistakes You Might Not Know You’re Making
NEW YORK, November 28, 2023 (Newswire.com) - So, you’re regularly investing, which is a good thing. Likely, you’re creating a modern portfolio - incorporating Yieldstreet alternative assets - that’s less sensitive to market volatility. Still, you could be making missteps about which you are unaware.
To help you, here are five investing mistakes you might not know you’re making.
Minimal or No Portfolio Diversification
You know that age-old caution against putting all one’s eggs in one basket? Well, it IS true, at least when it comes to investing. Rather than focusing too much on one kind of security, spreading assets across varying types can mitigate risk, shield against inflation, and potentially improve returns. In fact, diversifying one’s holdings is an investing strategy that is essential to long-term success.
It is a fine line: too much risk exposure makes you uncomfortable but not enough may not yield sought-after returns. If you better understand the nature of risk and make moves to manage it, you set yourself up to better meet short- and long-term financial goals. Be sure to establish the appropriate balance for your situation. You may be okay with risk – the amount of exposure to the likelihood of adverse outcomes from an investment -- but at least be certain you understand what you are doing.
No Investment Goals
It is definitely good to invest – it’s even better to also have investment goals. While nearly 60 percent of investors say their primary goal is long-term growth, too many emphasize short-term returns or the latest investment trend. In fact, having investment objectives is important to successful investing. Investment goals lend structure and purpose to the capital allocated to investment products. Without them, you are more likely to make investing mistakes.
Forgetting About Inflation
Inflation has historically averaged 4 percent a year, and it’s no secret that the U.S. has been experiencing high inflation levels for a couple of years now, although levels have been lately decreasing. That’s why it’s important to know what kinds of securities – alternatives such as art and real estate, for example – respond best to inflation. Generally, private-market assets, because of their low correlation to public markets, have for decades performed better than stocks during times of market volatility.
Not Regularly Reviewing Your Portfolio
Life happens, and personal circumstances change. So to ensure that you are on the right track, and remain so, you should make it a habit to review your investment portfolio at regular intervals – quarterly or annually is common – to see whether your holdings need rebalancing. You also want to be sure that your portfolio doesn’t become too reliant on the performance of a single investment or asset class at any given time.
Investing can be an effective method of putting your money to work and prospectively building wealth. These five investing mistakes you might not know you’re making could, if corrected, save you a lot of money, time, and sweat equity.