The Top Mistakes made by Investors

In my dozen plus years of advising individuals and businesses I have found a number of common mistakes that have derailed even the best laid financial plans. I thought by sharing them I might be able to help others sidestep the pitfalls and the negative impact they can have on your portfolio and long-term financial plans.

1. Failing to establish a time horizon and investing accordingly -

If you have expenses that need to be funded in 3 years or less, you should not be investing the cash for them in the stock market or other risky investments. These monies should be carved out of your investment portfolio (the money earmarked for long-term investing) and invested appropriately in liquid assets such as money market funds or term-certain fixed income offerings. If the money is not going to be needed for 3 years or more, an investment plan should be established based upon specific a time horizon and risk tolerance for these funds.

2. Failing to thoroughly diversify your portfolio -

Many investors know about the concept of diversification and think that by owning different investments, they are diversified. Diversification of an investment portfolio makes good sense on an intuitive level. However, it wasn’t until Harry Markowitz published his model of portfolio selection that this concept became a formalized part of sound investment practice and formed the basis of today’s Modern Portfolio Theory. Beyond this basic concept of diversification, the key to Markowitz’s premise is the revelation that the risk of any investment can be reduced and/or performance increased by forming a portfolio of diverse and non-correlated assets. That is, it is important not just to seek a diversity of asset types, but also to seek assets that have low or near-zero correlations to one another. It’s not about owning different investments; it’s about owning different, non-correlated investments.

3. Letting potential tax implications rule your investment decisions –

Many investors delay selling an investment that has done well regardless of how good or bad the future looks for the holding. Their response is, “I will have to pay taxes if I sell.” By not selling, they set themselves up for not having to pay taxes at all – usually because the investment starts on a decline and their concern switches from “having to pay taxes” to one of “hoping for a turnaround.” Don’t be afraid to take some profits off the table. While taxes are an unpleasant result of investing, I prefer to look at them as a positive sign as it indicates you are making money and your investment plan is working.

4. Buying a stock based upon a “hot tip” -

Too many investors listen to a friend’s advice because he or she always seems to have the next “great” money making idea. They don’t take the time to assess the idea personally and jump in because it’s only a few thousand dollars they are investing. Unfortunately this is not investing – it’s gambling. If you want to gamble, go to Vegas and at least get free drinks, dinner, a show and a room for the risks you are taking. Any investment that is being considered for your portfolio should be thoroughly researched and have passed a comprehensive financial screening scrutiny.

5. Attempting to time the market -

Waiting an extra day, week, or month to try and buy in at the “right price” just doesn’t work. No one can predict the future. If they could they most likely wouldn’t be sharing this knowledge with you for free. Successful investors use time, patience and a disciplined approach to increase the likelihood of maximizing their investment returns – not trying to time the market. If you have done the research and the investment is sound and meets your criteria then buy it, regardless of timing.

6. Failing to regularly reevaluate your investments -

Over time all investment styles, strategies and types fall out of favor. So, like timing the market, it becomes virtually impossible to know what is going to be “hot” in the next bull market and what isn’t. For this reason it is always prudent to stay up-to-date on your investments to insure they are still the same investment that you originally purchased (segment drift and manager changes can be one reason they may have changed). If your investments consist solely of mutual funds then an annual review is a good place to start.

7. Basing investment decisions on emotion -

Maybe the stock market is going through a bad time because of a short-term geo-political or economic event. Stay calm and make an educated, well thought out decisions about what, if anything, to do. Assess whether the event will affect the economy long-term or if it’s just a short-term blip. The best move is often no move at all. If it is a short term incident, many times the smart, prudent investor will make additional investments because the current decline provides them with an excellent buying opportunity. The key to successful investing is to have a disciplined strategy and to stick with it.

8. Cashing out gains and dividends rather than reinvesting -

Once you’ve realized gains or had distributions and dividends paid out, insure they are reinvested back into your portfolio. If you pull out your capital gains, dividends and interest, your money won’t compound as quickly, thereby leaving you with a smaller chunk of change down the line. Letting your investments compound is one of the major tenets of successful investing.

9. Owning too much employer stock -

Many people get over-weighted in employer stock because of options and stock purchase plans made available in today’s competitive compensation packages. While these are great supplements to their annual salary they can put an employee in a position of having too much money invested in their employer’s stock. Additionally, it is quite common for people to invest in “what they know” and what do you know better than the company you work for? To compound the problem many people will add more employer stock to their 401k holdings and individual brokerage accounts. Not only does this create a diversification problem in their portfolio but it also subjects them to excessive single stock risk. A good rule of thumb to follow is to insure that no more than 5-10% of your entire investment portfolio is in any one single stock. If you find yourself in this situation the importance of creating a well thought out reduction strategy cannot be overstated.

10. Following the herd -

The most successful of all investors are moving in the opposite direction of what everyone else is doing. They buy when most are selling and sell when everyone else is buying. By following this simple plan you can preserve your capital and potentially sidestep the next bubble (can anyone remember real estate, internet stocks, and technology growth funds?).

11. Not investing at all –

Somehow in today’s society that Mocha Cappuccino Latte seems to take precedence over saving for the long-term. We are a society who wishes to satisfy the “here and now” rather than the securing our future. The important fact here is that those two are not mutually exclusive. In fact, BALANCE is the key in any long-term endeavor, but by always keeping an eye on the end goal you can make sure it is not out of mind while satiating the here and now.

12. Investing without a plan -

Investing without a plan and lacking the discipline to follow it is a sure way to lower your chances of success. The chances of obtaining any long term goal can be greatly enhanced by creating a strategy, following it and regularly reviewing it frequently enough so it reflects any changes that have taken place since implementation. Many investors start off with a small amount of money and start putting it to work without a plan. As time progresses they find they have a mish-mash of investments in their portfolio with no clear strategy or direction. It’s never too early to invest but it’s even better to invest early with a plan.

13. Taking too little risk -

Some people don’t want to take any risk and cannot stand the volatility involved with risky investments. While it may seem like you are keeping your money safe and secure by not taking risk, it is more than likely you are not because of inflation. If your time horizon is greater than 5 years it is recommended that you have no less than 25-30% in growth investments (i.e. stocks) in your portfolio to ward off the effects of inflation. The actual percentage to own is dependent upon many factors including but not limited to age, time horizon before money is needed, current financial situation, etc. A good general rule of thumb to use as a starting point for the percentage of equity you may include in your portfolio is “120 – your age.”

]]> http://www.projectoneservices.com/?feed=rss2&p=693 0 http://www.projectoneservices.com/?p=583 http://www.projectoneservices.com/?p=583#comments Sun, 23 May 2010 14:47:35 +0000 admin http://projectoneservices.com/?p=583

So, debt consolidation is something of interest lately, as you’ve been overwhelmed with multiple debts and making timely monthly payments. You’re considering shopping around for just that right company to consolidate your debt which is a wise choice. But, before you do such things, it’s important to be scrupulous and take care when selecting a debt consolidation company using absolute caution. This though is not saying debt consolidation companies are run poorly or with ill-intentions, but there are ways to weed out the bad from the good, separate which companies will prove more helpful and which ones will become more of a headache.

Single Loan Status With A Good Company

Consolidating loans and debt into one unified loan is a great financial step to take. But this initial step needs to be taken with a watchful eye and steadied foot. This is so simply because of the wide range of quality offered through various debt consolidation companies. Some can be extremely helpful and others more so attempting to scam you. Yet, you shouldn’t worry, because there are ways to avoid bad companies and embrace upright ones instead.

Read the following list below for tips and further information on choosing the right debt consolidation company:
The differences between non-profit and profit debt consolidation companies are apparent, yet don’t assume that non-profit options will be more interested in looking out for you more. Non-profit debt consolidation companies can prove overt too, taking advantage of indebted individuals just as much as profit-driven companies. Reputation is everything nowadays, especially with financial companies. It’s best to go with a company or association well-trusted and established. Even locally, through a close-to-home bank, could be a great first step option simply because smaller-run banks typically provide loans and make great money once their borrowers pay them back. Larger companies on the other hand get paid through sheer sign up procedures and could be less likely to cater your position in the long run. Beware balloon loans, as they can pop right in your face at the close of their length. These type of loans offer you to pay tiny amounts monthly, for say, 6-10 years roughly. Yet, at the end of the term, you are held responsible to pay off the debt completely, and in full. Little progress is made through this venture. Do research and do some math. Consult the BBB or Better Business Bureau for optimal debt consolidation companies. Research their histories and current statuses. Also, crunch some numbers and surmise various options through different companies. See where you stand in terms of what you’ll be paying, how much you’ll be able to pay and how long it will take you to pay. Be sure to know and understand in full the differences between fixed rate loans and variable rate loans. For instance, variable rate loans provide you with a lower rate initially, yet after a few years transpire, they’re likely to rise. Also, be sure you’re aware of starting payment values and how they will change in upcoming months and/or years.

Take the above few bits of information into mind and it’s likely you’ll be able to avoid companies with a ‘make some money and run’ policy and pinpoint debt consolidation companies looking to truly help you organize debt and pay it off fully.

]]> http://www.projectoneservices.com/?feed=rss2&p=583 0 http://www.projectoneservices.com/?p=707 http://www.projectoneservices.com/?p=707#comments Sat, 22 May 2010 19:26:43 +0000 admin http://projectoneservices.com/?p=707

This loan has been especially designed for those people who are bad credit holders. They have not got a good reputation due to their financial complications. Financial complications are bound to come in the life of the person because these are unexpected troubles which may occur in the life of everybody. For getting instant solution of their problem which are cropped in the life of persons. When people have shadow of bad credit, their coworkers, relatives, buddies, neighbors don’t like to establish their relationship bonds with them. Now a day, money is motivator as well as creator of relationship.

When they are in deep trouble on account of meeting unexpected accident which put them in hot water, the utilization of Bad credit installment loans can be taken conveniently without any pros and cons. It can solve their trouble within a snap of fingers. Just borrowers, need to fill out online application forms. The amount, which is filled by an applicant, will be wired into their account spontaneously within 24 hours and next working day. The rest of the work will be accomplished by an applicant. The exploitation will be taken place in accordance to their own desire.

Classification of Bad credit installment loans

There are two kind of loans available in this trade

1 secured loans.
2. unsecured loans.

The rate of interest is little bit lower than other loans. Being secured loans, it needs collaterals. The main advantage is that your rate of interest will be curtailed itself. This way, the burden, which you have, will be reduced. The amount which will be offered to the borrowers may be in the region of $ from 5,000 to $75,000. Their repayment tenure is 5 to 25 years.

Things are bit different than other loans. In fact, under this loan, priority is not given to the collateral by lenders. So it is acknowledged as unsecured loans. Lenders also covet to make the most of this opportunity, therefore they put higher rate of interest to get maximum benefits from the borrowers. Bad credit installment loans are handy for the borrowers in the purpose of bestowing their quality which can be sheet anchor and remover of the problem.

]]> http://www.projectoneservices.com/?feed=rss2&p=707 0 http://www.projectoneservices.com/?p=645 http://www.projectoneservices.com/?p=645#comments Thu, 20 May 2010 16:41:44 +0000 admin http://projectoneservices.com/?p=645

When your income goes down for any reason, or just because you want to live more economically, there are many simple ways to save money. Some of these are very obvious, but it’s surprising that we don’t really practice them until we have to.

1. Don’t waste. Find ways to creatively use your leftover food, such as making casseroles and stews. For day-old bread, make some delicious bread pudding. Make sure you have a full load of laundry before you run the washer. Turn out the lights when you leave a room. These little things add up.

2. Learn to sew and mend. You can have pretty clothes at a fraction of the price if you know how to sew. With a simple knowledge of basic hand stitches, you can mend clothes or sew on buttons also. How many times have you quit wearing a garment because it needed a small mending repair?

3. Buy generic brands when possible. Try out a couple at a time to see if you like them. Use coupons wisely. Don’t let them lure you into buying products you wouldn’t normally buy just because you have the coupon, unless you really want them.

4. Watch your laundry detergent and softener usage. Look carefully at the measurement on the lid or scoop of the laundry detergent, depending on whether you are using liquid of powder. Sometimes we are in such a hurry that we just fill it up, not realizing that maybe that measurement was for an extra large load. Another little trick I use is to only use half of the softener amount. It seems to work just as well.

5. Delay gratification. It is so easy to fall prey to impulse purchases. If you are short on money and don’t really need the item, tell yourself that you’ll think about it for a day or two. You will probably forget about it as soon as you get home from the store, and it would have been money wasted.

6. How many hours would you have to work to pay for that item? When deciding to buy something that is not a necessity, calculate your hourly income or your husband’s. How many hours would you have to work to buy that product? Is it worth it? That is your decision.

There are many ways we can cut costs. Try to make it more fun by challenging yourself to find ways to live more frugally, and still live well. Be creative about it. You will be surprised at how much waste can be prevented, and you will be happier that your budget stretches further.

]]> http://www.projectoneservices.com/?feed=rss2&p=645 0 http://www.projectoneservices.com/?p=691 http://www.projectoneservices.com/?p=691#comments Thu, 20 May 2010 02:25:11 +0000 admin http://projectoneservices.com/?p=691

For those who are interested in making money in the real estate investment business only sky is the limit. Does not matter if you do not have money to invest in the business or rent a space to begin the operations. There are business solutions that allow you to spin money without any establishment cost. If you are wondering how – read this article about Bird-Dogging.

What Is Bird-Dogging;
‘Bird-Dogging’ refers to a business, which involves identification of a real estate property by the businessman. Upon identification, the businessman hands over such a property to a person under a contract to repair and resell in exchange of certain fees. The fees can vary depending on how experienced is the person in the business and what is the condition of the property

Understand Bird-Dogging;
In other words, bird-dogging gets you income with no risks involved. It is an easy way of making money in the real estate market, of course for those with strong conviction. People who bird-dog are in constant search for abandoned properties or those lying unused over a period. After identifying such properties, bird-dogs locate their owners and find out if they are willing to sell their properties. In which case, the owners are willing to sell such properties. The bird dog shows them to the potential investors. If the investor likes the real estate property, he will pay certain fees to the finder of the property or the bird dog.

Become a Bird-Dog;
The first step towards becoming a bird dog is to find a company that is engaged in the business of buying houses. You can find plenty of such companies in the yellow pages or in the newspaper advertisements. It is however advisable to approach an investor who enjoys a reputation in the market.

After locating such companies, you can ask them to assign you a specific area, so that you can concentrate properties only in that particular area. Then you need to visit the assigned area regularly to look out for ‘For Sale’ signs. Check for both rental and ownership accommodations.

Patience will fetch you Money;
Do not be disappointed if your first few findings are turned down. The skill of bird-dogging is acquired gradually. Hence, remain motivated and with time, you will get a feel of what the investors look out for in a property. Once you master the skill, your success will know no boundaries.

After gaining grounds in the business, as a bird dog, you can earn from $500 to $5000. Your earning potential will depend on how established the investor is and what is the cost of the deal. You can also look at doing business with new investors in exchange for a standard fee. Such a business initiative will diversify your revenue profile.

]]> http://www.projectoneservices.com/?feed=rss2&p=691 0 http://www.projectoneservices.com/?p=701 http://www.projectoneservices.com/?p=701#comments Wed, 19 May 2010 11:05:42 +0000 admin http://projectoneservices.com/?p=701

While you are going through a phase of developing your career, it is very common to wait for a good option. Or, you have just finished your collage studies and have not found out a job yet. Take this instance also, where you are deliberately refusing the job offers, as you want to first acquire some new skills. Until that period, loans for employed may prove to be a good source of finance for such people. However, since you do not have a good income to support the repayment, borrow the loan in a careful manner and search for a suitable deal.

The loan will come at low rates and relaxed terms-conditions, if you have build up a credit history and it should preferably be a good one. But, if you do not have a credit history or it is bad or poor one because of some missed payments or defaults, convince the lenders of your intention of repaying the amount in timely manner and take a good repayment plan to the lender.

You should also know that loans for employed are categorized in secured or unsecured options. Those, who can offer any property like a vehicle, valued papers and even a home, they can borrow an amount at low rate of interest through the secured loan option. Depending on collateral value, they can find £5000 to £7500 for its repayment in 5 to 30 years. But, if you are tenant or non-homeowner, then the unsecured loan is the only way to borrow the money, which will be given at little higher interest rate in the absence of collateral. You can borrow £3000 to £25000 to repay it in few months to 15 years. For bad credit borrowers, an enhance rate may be charged.

To find out these loans at competitive rates and to keep the additional charges lower, research the internet. Make sure that the deal you are going to sign as loans for employed is of lower rates and costs. Borrow only smaller amount that you can easily repay. Such a loan will keep you away from incurring debts in future.

]]> http://www.projectoneservices.com/?feed=rss2&p=701 0 http://www.projectoneservices.com/?p=621 http://www.projectoneservices.com/?p=621#comments Sat, 15 May 2010 03:04:58 +0000 admin http://projectoneservices.com/?p=621

Unless people make a personal budget for themselves they will never be successful in their journey towards financial freedom. A budget is like the training wheels on a bike and works as a finance tool that helps keep people on the right path. For most it is necessary to keep a personal budget for their entire life but for others a budget is not needed after they get a feel for how their money is being spent and where it is going. Setting up a budget is the simplest and most basic building block in a persons quest for financial freedom. I can almost guarantee that you will not be successful on your journey toward financial peace without setting up your own budget.

Usually when people hear the dreaded B word (budget) they often run for the hills and they often try to avoid a financial adviser that suggests that they make a budget. People are often very scared of the work involved in making a personal budget but I am here to tell you that it is not really that bad. Resistance in establishing a budget often happens because people see a budget as some type of trap that restricts their freedom and forces them to change the way they live. The truth about budgeting is often quite the opposite. Usually those that do not set up a budget are the ones that have a ton of credit card debt and are restricted by the large debt payments they are required to make each month.

When you setup a personal budget you are simply setting up a plan to spend your money with intent as opposed to spending it aimlessly. The idea is to plan everything out so that you do not end up spending more money than you make. A personal budget usually seems restrictive at first but once you follow it for a few months it will help you to move away from your reliance on credit cards and it will actually give you more freedom.

Once you establish your budget you should expect it to take 3-5 months to get things right. In the beginning it is likely that you will make mistakes in your budget and forget about expenses. After 3-5 months you should be able to work through this and your budget should be almost a mirror image of your actual spending.

After establishing an accurate budget the next step is to stick to the plan. Most people tend to fail here. Anybody can write out a budget plan but the hard part is actually sticking to this budget each and every month. If you can stick to your budget I promise that you will be more financially free.

I hope that you now understand the importance of establishing a personal budget for yourself. Without it you cannot begin to pay off your debts and save money because you have no way to track and properly allocate your income.

My suggestion is that you do yourself a favor and grab a note pad and a pen and start working on your own personal budget. It is simple and completely freedom.

]]> http://www.projectoneservices.com/?feed=rss2&p=621 0 http://www.projectoneservices.com/?p=713 http://www.projectoneservices.com/?p=713#comments Thu, 13 May 2010 19:39:40 +0000 admin http://projectoneservices.com/?p=713

What is a loan taken against property? Simply it is the money borrowed from the bank while giving it some kind of assurance which is in this case any tangible item like a land, or a commercial property, or a built up property or even a residential object like a house. Even people who live in flats in cooperative societies can take advantage of the useful features of this loan. The only thing that they require to do is to submit a NOC( No Objection Certificate) from the co operative society in which they are living in.

When the user applies for this kind of a loan, the first thing that the bank does is figure out the net market worth of the property which the user is deeming as an assurance for the bank. Then the bank also check the credit history of the applicant. This is natural as the loan is a venture for the bank and it has to make sure that this venture leads to profit and not loss. Hence persons who have a bad credit history with multiple cases of defaulting are not suitable for giving a loan to. The total amount that the user takes as the loan normally falls in the price band of 75 percent of the total market worth of the product. This amount is required to be paid in monthly instalments until the total amount of the loan has been recovered.

The prospect of taking a loan against any type of property is a fantastic one. Anybody who is in need of money for various purposes can avail of this opportunity. Hence a person can take these types of loans against home when they want to improve and increase their individual businesses. They can also take this loan when they want to send their children aboard for higher studies for a better future and also when they want their children to have a family of their own by forming the immortal bond of marriage.

The process and the formalities for taking a loan against property is extremely hassle free and simple. For people who are engaged in jobs all the documents that they have to give are a set containing a residence proof, an identity proof, a from 16 for the previous years and also a passbook which shows his earnings as being credited for the last six months. For human beings who are into business they need a residence proof, an identity proof, a passbook and also a financial statement which is certified and has the tenure of the last 2 years.

Hence the bank lends a helping hand to people who need money and also give that help as a true friend. There are also many interesting features about loans against property. India is now a growing economy and hence has its population on an higher spending track which is balanced by a higher level of income. However when people require that extra amount of money, they can always go for loans against home as compared to other loans these have a much lower rate of interest. These loans also have a much larger time period for paying off the loan. Then there are also various kinds of plans from which the customer can choose from.

The Indian market for these loans is a big one and has many major players offering loans against property. India has banks like SBI of the State bank of India, ICICI, Kotak Mahindra and HDFC offering various types of loans against home. Hence these loans are very useful and are given by many banks in useful formats. Therefore a loan taken against property in India is quite useful and should be taken whenever the customer needs money. The bank is always there to lend a helping hand.

]]> http://www.projectoneservices.com/?feed=rss2&p=713 0 http://www.projectoneservices.com/?p=683 http://www.projectoneservices.com/?p=683#comments Thu, 13 May 2010 17:15:52 +0000 admin http://projectoneservices.com/?p=683

OK, everyone knows how compounding works. Interest upon interest, upon interest grows money in an exponential manner in a very cool way. If you double your money 13 times starting with just $100, you would have nearly one million dollars. That’s impressive, the math I mean. It is an astounding model and the strange thing is, it works. To think that a humble hundred dollar note could grow into nearly 1 million with 13 transactions.

Most investors typically work towards a yearly return and don’t hope for much more that 20% or 30% Even the best investors don’t expect to make much more than that. But, and here is the secret, what if you focus on short cycle investments? What if that 20% or 30% was made in a week or several weeks and not a whole year?

SOR or speed of returns is the key to massive investment gains. It is the time element that creates vast investor fortunes. Not the size of the return. A fast cycle investment is much more effective at making the yearly compounder, not 100% not 1000% but in the 10’s of thousands of percent. This investment secret is what Warren Buffet knows. Its what all genius investors know.

The time element is what makes fortunes. That is why I want you to pull out a hundred dollar bill out of your wallet or purse, and look at that note. Contemplate that paper bill carefully, because you are holding in your hand an absolute fortune. It is a seed that will grow into a large oak tree of money. All you have to do is find the right investment vehicles that have fast cycle returns.

]]> http://www.projectoneservices.com/?feed=rss2&p=683 0 http://www.projectoneservices.com/?p=635 http://www.projectoneservices.com/?p=635#comments Sat, 08 May 2010 15:06:38 +0000 admin http://projectoneservices.com/?p=635

Now the name Forex Boomerang might be a bit strange, but then again FAPTurbo is a type of diesel engine! A Boomerang returns to it’s owner and Forex Boomerang returns profits to it’s owner, but that is the only link as far as I can see. If you had invested $500 into a live trading account in January 2008 you would have made over $300,000 by now! No other EA can demonstrate that kind of performance.

Earlier this year I was approached by the developers of Forex Boomerang to test their latest Expert Advisor. Several experienced Traders were approached to test it out on a variety of MT4 Platforms and in different countries to make sure it works correctly. Whilst I do not have any connections with Forex Boomerang, I do have a Forex Robot Review site which I assume was why I was approached.

At the same time I have been testing several top EAs so have a good idea what these Forex Expert Advisors can do and what the main differences are between them. It is actually quite difficult to compare the different ones and which will be best for your type of trading and risk profile. On top of that they are all priced differently so working out value for money is almost impossible.

Forex Boomerang Summary

* Creates & Trades Forex 24hrs A Day 5 Days A Week

* Requires No Human Intervention

* Trades With Low Risk And High Returns

* Works With Any metatrader 4 Broker

* Trades on the Euro/USD 1 Hour Chart

* Is based on Heavy Build, Complex Algo

* Has a Great Stop Loss, Take Profit System

* Was Developed From The Ground Up With Profit In Mind

* Can be used on Free Demo Accounts Without Risking Real Capital

For me the Forex Boomerang outperformed the other EUR/USD advisors (can’t name them here unfortunately) over and over again. It is the next generation Robot that has an AI element, it really does act like a real trader, reacting to changes in the market and compensating with more trades or competing trades to limit exposure. The actual system and algorithm are closely guarded secrets and I doubt I would understand it anyway!

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