The biggest mistake millionaires make when it comes to investing is relying on guidance from historical returns, according to a global survey carried out by deVere Group.
Following this top cited mistake of reliance on historical returns (38%), the second (35%) was not having sought advice, and the third (21%) was lack of diversification. A collection of other mistakes and ‘do not knows' made-up the remaining 6%.
DeVere CEO and founder, Nigel Green, said: "It's interesting to see that for the first time in our surveys of this kind that the number one investment mistake high-net-worth individuals have made is, they say, reliance on guidance from historical returns.
DIY investing and not having a regularly reviewed plan is, typically, a path full of costly pitfalls"
"To me, this suggests that wealthy investors are paying attention to how the world has changed dramatically this year and, therefore, investment strategies need to adapt and evolve too in order to reflect the new era we're living in.
"With fundamental shifts in economies and the markets, the often-quoted industry phrase ‘past performance is not a reliable indicator of future performance' has perhaps never rung more true than it does today."
He added: "It's encouraging that seeking advice is deemed fundamental to success by millionaires as it shows that DIY investing and not having a regularly reviewed plan is, typically, a path full of costly pitfalls."
The survey was carried out by deVere Group, one of the world's largest independent financial advisory and fintech organisations, and queried 752 investors with investable assets of more than £1m (or the equivalent) in the UK, Europe, Asia, Africa, the Middle East, Australasia, Latin America and North America about their biggest errors whilst investing before they became clients.
"The lack of diversification was in some ways bound to make the top three. Why? Because it is universally regarded as an investor's best tool to mitigate risks and capitalise on opportunities that arise," Nigel Green said.
The fact the top three mistakes are all fairly close in percentage terms says to the deVere boss, "that, in fact, they all link in pretty tight to number two - that's to say, having a robust, considered and consistently reviewed strategy for your personal finances."
Green concludes: "To some, this could appear as if investing your hard-earned money is dangerous.
"Yet nothing could be further from the truth - not investing is likely to be more dangerous to your wealth over the longer-term.
"This is shown by the fact that most of the world's wealthiest people are themselves committed investors."