Strategy

Blacktower View - Learn from the Mistakes of Others by Keith Littlewood

There is a lot I have learned over more than three decades in the financial services industry and while this period of managing client investments was made possible by my education and enthusiasm, the years have taught me that there is no substitute for experience. There is a big difference between knowing something theoretically and having first-hand, practical experience of it.

However, another side of my experience has been as a financial planning "firefighter"; learning, after the event, from the experiences of others, typically those clients who come to me a little crestfallen or embarrassed as a result of losses or stagnation caused by regrettable investment decisions.

Every time I sit down with these clients to work on a new strategy, I am reminded of just how easy it is, without the right levels of education, experience and discipline, to go wrong. Below I have taken my experience of common investment mistakes and converted them into "teachable moments".

Take your time

Too often investors make decisions in a hurry. Sometimes this is because they mistakenly feel that finance should be fast-paced and adrenalised in the stereotypical Wall Street style. More often it is because they feel pressure – either internally, to get things right, or externally, because an adviser is attempting a hard-sell or offering an unconscionable inducement. Yes, begin investing early, but take your time. Financial plans should be about long-term security rather than getting rich quick.

Be wary of hype and unrealistic claims

If something sounds too good to be true, then it probably is. Wildly optimistic "guaranteed" returns should be treated with extreme caution. Always check the credentials, qualifications and regulation of the adviser and read the small print before signing on the dotted line.

Don't chase heat

Anyone familiar with the tech crash or the experience of cryptocurrency investment during 2017-18 will understand the pitfalls of investors chasing "hot" stocks in droves. The top 10 cryptocurrencies nosedived by 80% during 2018 and who was hit hardest? Yes, those investors who bought cryptocurrencies when they were seemingly "hotter" than ever before.

Diversify, diversify

We all know that it is a bad idea to put all our eggs in one basket, yet time and again investors are prone to doing just this. Whether they are showing home bias by overly investing in British stocks or placing their hopes in a single asset class, investors the world over fall prey to this basic error all the time. Diversify your portfolio so that you are protected from losses in one major area and you could avoid devastating devaluation of your assets.

Review and reflect

Although we all wish to stay disciplined to our long-term financial plans, it is essential that portfolios are regularly reviewed to account for performance, outlook, regulatory changes and the evolving tax landscape. Also, it is conceivable that your goals and personal circumstances might change, particularly if you are an expat and have cross-border concerns.

Remain objective

Your mate Barry may recommend investing in buy-to-let property in Timbuktu but that doesn't mean it is necessarily a good idea. With the advent of the internet "hearsay" financial advice can be found everywhere, but there is still no substitute for the expertise and objectivity of independent financial advice that is tailored to your precise situation.

Blacktower Financial Management, making a difference

Blacktower Financial Management has more than three decades of proven expertise providing financial advice and wealth management services to our clients. We can help you avoid making some of the most common investment mistakes and help you weather the storms of economic volatility such as through Brexit.

Contact us today for invaluable professional help so that you have the best possible chance of reaching your financial goals.

Back to Top