Portfolio Mistakes to Sidestep

3 Investment Mistakes to Sidestep in Your Portfolio

June 4, 2018
Michelle HolmesBy Michelle Holmes
Trust Investment Officer

If your investments aren't performing as you anticipated, is it because the markets aren't doing well or because you are undermining your own progress? Many aspects of investment performance are outside of your control, but you can do something about avoiding mistakes with your portfolio. Understanding behavior that could adversely affect your portfolio's returns may help you avoid it in the future.

1. Losing Your Focus

It's easy to react emotionally when hearing news of daily market returns. But if you're investing for the long term, focusing on the market's ups and downs in the short term can lead you astray. The decisions you make when investing for long-term goals such as your retirement shouldn't be overly influenced by current events in the markets.

You can help gain perspective by comparing several years of your investment's returns with the performance of similar investments and a benchmark index. For long-term goals, how an investment performs under a variety of market conditions is more significant than how it performs on any given day. By setting long-term investing goals, you may be able to avoid getting turned aside by daily events.

2. Losing Your Balance

Diversification, or spreading your portfolio among different investments, can help you manage risk. But it's important to find the right balance that is suitable for your time frame and risk tolerance. Being too conservative may prevent your investments from keeping pace with inflation. But not being diversified enough could expose your portfolio to too much risk.

3. Forgetting to Review

It's important to periodically review your investment strategy with your financial professional to ensure that it still meets your needs. And don't forget to review your plan if there are significant personal or financial changes in your life -- for example, a birth or death in your family, if you've gotten married or divorced, or if you've changed jobs. These experiences may affect your goals and objectives, so be sure to evaluate your situation to see if any investment changes may be necessary.

To make sure you are investments are performing as well as they can, contact an advisor for a portfolio review today.

About the Author

Michelle Holmes, CFA

Michelle Holmes is an Assistant Vice President in Investments with Security National Bank's Wealth Management Division. A Chartered Financial Analyst® charterholder, Michelle has two decades of investment experience. She graduated from Morningside College with a Bachelor of Science in accounting, business administration and economics.