A failure to properly diversify their portfolios was revealed to be the No. 1 mistake that a sampling of 652 high-net-worth international investors felt they’d made, according to findings of a just-released survey.
The survey was carried out by deVere Group, and queried investors with investable assets of more than £1m (or the equivalent) in the UK, Asia, Africa, the Middle East and the US about their biggest investment mistakes.
After failing to diversify sufficiently – cited by 27% of those polled as their biggest blunder – not starting to invest early enough was named by another 23%.
Focusing on the short-term (20%) also featured high on the investors’ list of mistakes, as did being emotional over investments (15%) as errors that have cost investors money. Of those remaining not having kept enough cash in reserve was cited as a problem for 8% whilst 7% did not know or did not respond.
Nigel Green, deVere Group chief executive admitted to having made some investment mistakes himself, but said that not investing is “probably more dangerous” over the longer term.
‘Mistakes that could have been easily avoided’
“All serious investors, including myself, have made previous investment mistakes that could have been easily avoided,” he said. “All this could make it sound like investing is somewhat perilous. Yet nothing could be further from the truth.
“It is almost universally recognised that seeking professional independent financial advice allows you to avoid most of the common mistakes that have been flagged up by high-net-worth investors in this poll.”
Of the poll’s results, Green noted that having a “properly diversified” portfolio, across asset classes, sectors and regions, is one of the fundamentals of successful investing.
“All too often even experienced investors focus on the short term heavily and there are many disadvantages to this,” added Green.
“Typically, a short-term investment strategy involves considerably higher risks, compared to investing over a longer period.
“Other pitfalls of a short horizon include that investors can often sell a quality investment too early. Alternatively, they may sell an investment if it drops in the short term, meaning that they would then miss out on it potentially growing steadily in the longer term with increasing returns,” Green said.