10 Mistakes Every Investor Makes and How to Avoid Them HTML version
10 Mistakes Every Investor Makes & How to Avoid Them
Mistake #6 – Failing to Readjust Portfolio
There is a good reason why financial advisors stress having a
balanced, diversified portfolio – because you will always have losers.
By being adequately diversified in the proper asset classes, you
balance your risk and reward by distributing your funds in a way that
are in line with your financial goals.
Depending on your age, risk tolerance and investment horizon, there
are recommendations on how you should divvy up your capital.
allocation may look like based on your age:
Investment allocation by age
20-39 40-59 60-69 70-79 80+
0% 20% 40% 70% 80%
55% 45% 35% 20% 10%
Mid-cap funds 15% 15% 10% 0% 0%
15% 10% 5% 5% 5%
15% 10% 10% 5% 5%
As some asset classes will earn more than others, over time your
portfolio will become unbalanced and require you to make
adjustments to get back on track.
Likewise, if your investing rules are to have $1,000 in shares spread
across 5 stocks, your portfolio will also require some maintenance.
As a result of some stocks increasing in value and others
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