Markets, what are the 10 most common investment mistakes

When you make some investments it is essential to avoid errors that can compromise one’s goals Yield. Here we have collected 10 of the most common mistakes among those committed habitually and cyclically by investors.

In fact, we often focus on the rules to follow in investmentsless frequently we look at which ones errors avoid in order to operate more easily on the financial markets. Let’s see which ones are in a little more detail.

The list of the most common errors

• The first common mistake is the diversification insufficient. The investor tends to concentrate his portfolio on what he knows best, thus increasing the risks.
• Another common mistake concerns the risk. When an investor builds a portfolio, he often underestimates the risks. Or, conversely, it emphasizes short-term volatility while neglecting the long-term benefits.
• The third is to neglect theinflation, a very topical theme with the record price increases of the last few months. The objective must be to have a portfolio with an average profitability higher than the inflation rate.
• The fourth concerns the lack of one strategy effective. Many build a portfolio with the typical bottom-up approach, but without an appropriate steering wheel and stock selection this does not deliver positive results.
• The fifth is the scarce Preparation. When things go well, the sense of overconfidence increases. And so investors approach the markets without adequate skills. It all backfires when things go wrong.
• The sixth is the underestimation of costs. Fundamental element on which the long-term profitability of a portfolio depends. Avoiding expensive and inefficient instruments such as mutual funds, certificates, policies and so on, instead choosing efficient products such as ETFs is the first step towards improving profits.
• The seventh is wrong horizon thunderstorm. When it comes to choosing the period to evaluate the results, investors become short-sighted. We tend to underestimate our horizon, forgetting that most of us invest as long as we are alive.
• The eighth is to feed expectations unrealistic. Savers tend to chase performance, they don’t just hold those financial instruments that have yielded the most in the recent past but they also think that high returns are the norm. Obviously this is not the case, aiming for sustainable growth over time rather than instantaneous is the best choice
• The ninth is being conditioned by emotions. There are many studies on behavioral finance that have highlighted which biases have the most impact on investors: loss aversion, action bias, recency bias, gregarious behavior and self-blame, procrastination.
• Tenth and last, last but not least, as they say, perhaps the most serious mistake: non invest. Keeping the money still in the current account will only make your capital lose value, since this solution will not allow you to accumulate interest. A choice that in the long term could cost even tens of thousands of euros.