THE TOP 10 MISTAKES INVESTORS MAKE & HOW TO AVOID THEM

1.    NOT UNDERSTANDING THE BASICS

Before you actually invest any money, it’s important to understand the basics about different types of investments and their returns, such as bank deposits, shares, direct property investments, managed funds, property funds and more. Each asset class has strengths and weaknesses….you could be seeking a higher or regular cash income over a medium investment term or capital growth from a longer term investment.

One of the keys to success will be diversifying your investment funds by dividing your money among the different types of assets.

 

2.    INVESTING IN ASSETS THEY DON'T UNDERSTAND

Most people who are anxious about a particular investment didn’t completely understand it when they first got involved. In addition, they often do not have an exit strategy, or are relying on variables outside of their control to cash it in. Opportunities such as property funds or investing in shares can sometimes be seen as overcomplicated and confusing…..once explained in laymen’s terms any confusion may be eliminated.

Ensure you ask lots of questions, do lots of research and invest in opportunities in which you understand the asset class, each stage of the process, the timeframe and the proposed exit-strategy. 

 

3.     INVESTING THROUGH ORGANISATIONS THAT AREN'T REPUTABLE

Investor’s decisions can be clouded when they just focus on the asset class or a proposed return and don’t investigate the organisation offering the investment.  Ensure the organisation behind the product has a solid track record and holds the appropriate licences and accreditations.

Do they have reputable experience in their industry? Can you see that they have managed successful projects before? 

Making sure that everything is in order before signing on the dotted line is a key requirement.

 

4.     NOT INVESTING AS SOON AS YOU'RE ABLE TO

The earlier you start, the easier it will be to achieve your financial goals. Many investors lose out because they procrastinate and they miss opportunities or invest too little. If you don’t start early, it can be difficult to catch up. There's no perfect time to start investing – other than with 20/20 hindsight. Instead, you should be planning to be a life-long investor. Far, far more important than picking tops and bottoms of the market is getting started – and continuing.

 

5.     NOT BEING PREPARED

Typically, some investment opportunities open & close quickly….particularly “wholesale” investments that are only available to “sophisticated” investors.

If you are a sophisticated investor and know that you are thinking of investing soon, it is a good idea to get all of your paperwork in order straight away, so you are in a position to take up an offer once the right opportunity comes along.

Arranging with your Accountant to get your Wholesale Investor certificate arranged for example, is a great way to ensure that when the right opportunity comes around you are ready to get involved.

 

6.     LETTING EMOTIONS GET IN THE WAY

Solid investment opportunities are rooted in facts and thoroughly investigated, not feelings.

Ensure you go over all points in the documentation and are happy that the cold hard facts & figures add up before you submit an application to invest.

 

7.     HAVING NO IDEA WHERE THE MONEY GOES

It is very easy to get involved with investment opportunities that don’t provide much detail in where your money is tied up.

At Capita, we specialise in Single Asset Property Funds, meaning Investors funds are used in one project only. It allows Investors to monitor the progress of their investment, the milestones of the development and plan the return of their invested funds.

 

8.    NOT PAYING ATTENTION TO COSTS & CHARGES

Taxes, fees, inflation, and other costs can all affect your return on an investment. It’s wise to consult with an investment professional and your tax adviser regarding the best way to calculate and minimise these costS - the devil is in the detail.

 

9.    HAVING UNREALISTIC EXPECTATIONS

Avoid setting unrealistic or impossible expectations from any investment. It clouds your judgment, generates bad decisions, and erodes your confidence. Be realistic with your performance projections and see the long road of a lifetime of investing decisions.

 

10.  REACTING TO THE MEDIA

There are plenty of 24-hour news channels that make money by showing “tradable” information. It would be foolish to try to keep up. The key is to sort valuable information out of all the noise. Successful and seasoned investors gather information from several independent sources and conduct their own proprietary research and analysis.

Using the news as a sole source of investment analysis is a common investor mistake - by the time the information has become public, it may have already been factored into market pricing.

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