Top Ten Investor Mistakes

Once you have a budget and plan in place, you will start to notice that your funds available for investment will increase. Before we dive into the investment world, I thought it might be a good idea to look at the top ten mistakes that investors make which I found on the Alberta Securities Commission website and in a local article published in the Money section of the Calgary Herald.

1. DESTINATION UNKNOWN
Are you planning for retirement, buying a house or
saving for your child’s education? Different goals may
require different investment strategies. Failing to plan is
planning to fail.

2. BEING SHORT SIGHTED
Investing is a long-term process. Attempting to buy and
sell with perfect timing is not only impossible - it can
also cost you a lot of money. Long-term strategies may
not make you a millionaire overnight, but they won’t
bankrupt you either.

3. BUY FIRST-LEARN LATER
Investing first, then learning about your investment, is
putting the cart before the horse. The results can be
hard to swallow. Check First- there are many sources
of information to help you learn about the investing
process and specific investment vehicles.

4. THERE'S NOTHING TO IT
If it were possible to consistently beat the market,
analysts and brokers would all be millionaires (they
aren’t). Don’t overestimate your abilities or those of your
adviser.

5. TOO MUCH OF ONE OR TOO LITTLE OF EVERYTHING
Trying to eliminate risk by choosing too many investments can destroy opportunities for good returns.
Conversely, having too few investments or focusing on
one industry sector will significantly increase your risk.

6. FOLLOWING “HOT” STOCK TIPS
Building wealth takes time, patience, and discipline.
“Hot” tips are often from uninformed sources and based
on misinformation. By the time you get a tip, it’s often
too late and the opportunity has passed. NEVER buy a
stock based solely on a tip.

7. THE “I LIKE THEIR PRODUCTS” PHILOSOPHY
They may make your favourite beauty product, snack,
or vehicle, but that doesn’t mean they are a well-run,
profitable company. Research is the only way to find out
how good a company really is.

8. DOING THE WRONG THING AT THE WRONG TIME
Buy low. Sell high – it’s sage advice for making money.
If you have a good investment plan, there’s no need to
panic when markets fall. Spend the time to make a plan
and stick to it through the downturns – they’re often a
great time to buy rather than sell.

9.TAXES? WHAT TAXES?
Taxes play an important role in investment planning.
Different investments are taxed differently. Involve a
qualified professional to speak about Canadian taxation
in your financial planning process.

10. RISK? WHAT RISK?
There are many types of risk that can affect an
investment. Even guaranteed investments have some
risk. Your investment objectives will help you determine
how much risk you should take.

The Alberta Securities Exchange has lots of other resources to assist investors. I recommend you check it out by going to http://www.albertasecurities.com/Pages/Default.aspx.