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Subject:  The 7 Biggest Investment Mistakes Made by the Av Date:  11/24/2015  6:24 PM
Author:  LizzieWeakley Number:  413276 of 396

No matter what anyone says, investment isn’t easy. Markets, assets and investment vehicles are always quite complicated. As such, many people make mistakes. However, if you learn more about investing, you should be able to avoid many of them. Below are seven investment mistakes made by the average person.

1. Failing to Rebalance Your Portfolio

A balanced portfolio does not stay that way forever. Markets, trends and the economy will all greatly change over time. Many people refuse to rebalance because it sometimes requires selling off assets that are performing well. This, of course, does not consider the goal of long term stability.

2. Not Using Strategic Tax Planning

Strategic tax planning is extremely important to investment. If you aren’t careful, you may end up having to pay a big portion for your returns to Uncle Sam. According to Karla Dennis and Associates, who provide professional tax preparation services to businesses and individuals, strategic tax planning is key to wealth building and requires a multi-pronged strategy.

3. Not Considering the Time Horizon

How you invest should be determined by the time horizon of when you need to access the funds in the investment. How you invest for your retirement 40 years in the future should differ significantly from how you save for your child’s college education in 15 years.

4. Avoiding Indexing

Many people like to stick with active managers for their investments. However, index funds have been shown repeatedly to outperform active managers by as much as 65 to 75 percent.

5. Making Decisions Based on Emotions

If there’s one truth about investment, it’s that making emotion based decisions can often lead to ruin. While gut instinct should be part of the investment process, you also need to keep much of your decision making tied to science and facts. Don’t let your emotional response to things like gains and losses hamper your over-arching strategies.

6. Not Admitting When You Make Mistakes

Every investor at some point is going to make a bad call. If you make an investment that performs increasingly worse quarter after quarter, at some point, you should probably cut your losses instead of stubbornly sticking with your initial reasoning.

7. Being Impatient

Most investments take time to bear fruit. Overall, you should be making investments with the long game in mind. Focusing on short term gains alone will result in eventually losing those gains.

Overall, investment is complicated. Still, if you use strategy and focus on the long-term, it is possible to produce significant returns.

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