Share investing: Four common mistakes that result in zero profits (or worse, losses)

Mar 10, 2018

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Mistake # 1: The absence of a methodology – most investors make ad hoc investment decisions. How can you expect to win the game if you have no game-plan?

Mistake # 2: Belief that they can make quick profits – too many people thing too short term.

Mistake # 3: No patience – invest in quality assets with a quality (proven) methodology and then have the discipline to ride through the volatility.

Mistake # 4: Almost no diversification – diversification is by far the biggest single necessary ingredient to winning the game of share investing.

What is the simple solution to these four mistakes?

The antidote to these four mistakes is very simple and available to all smart investors. Essentially you need to do three things:

You need to adopt a proven, low risk methodology. I am a strong believer in the passive investment methodology. Its low-cost and very diversified and proven to generate higher returns.
You need to invest in a manner that you would be comfortable doing so for the next 10 years. You need to avoid the temptation of trying to predict market returns – “market forecasters will fill your ear but will never fill your wallet” – yes, another Buffett quote; and
You need to diversify markets and assets classes. This means that you should invest outside of Australia – particularly in the US market as it makes up over half of the world index and provides tech exposure as discussed above. You should also consider defensive assets such as bonds too.

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