How to Avoid the Worst Mistakes
Investors Make

Investing is about taking risks, and when you do that, you’re entitled to expect a return that’s commensurate with the level of risk you take. But if you’re not careful, your own mistakes can prevent you from achieving the return that should be yours.

In my all-day seminars I always discuss these traps, and I want to share them here. I have identified 18 examples, and I hope they will let you learn from other peoples’ mistakes so you won’t have to learn them yourself – the hard way.

Mistake No. 1: No written plan.

It always puzzles me why people who spend days planning a two-week vacation will make five-figure investment decisions seemingly on a whim.

A Fortune Magazine article published in 1999 says people with written plans governing their investments on average wind up with five times as much money during retirement as those without written plans.

Obviously, the act of writing a plan doesn’t put money in your pocket. But people who are methodical enough to put their plans in writing are also likely to do many of the other things that lead to successful investing. And of course, even the most brilliant plan is worthless if it just collects dust on a shelf.

With a plan, you can get back on course when you go astray. But without a plan, you can’t even know you’re off course.

If you don’t have an investment plan that’s right for you, developing one should be your top priority. If you’re a do-it-yourself type, visit our Web site and look in the Basics of Investing section of our Newsletter archives for an article called “Don’t Have an Investment Plan? Start Here.” Or get professional help from someone who does not sell financial products.

Mistake No. 2: Procrastination.

Waiting for the right time can ruin your results over a lifetime. Procrastination takes many forms. You don’t start saving for retirement until it’s nearly on top of you. You “know” you should review your investments but other things always seem more pressing. You think you’ll catch up later when the market is better, when you’re making more money, when you have more time.

And there’s the irony, because the longer you wait, the less time you have. Every day you delay is a day of opportunity that you can never, ever get back.

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