Key Takeaways
- Understanding common investing mistakes can help you make more informed investment decisions.
- Creating a plan based on your financial goals is an important step toward long-term success.
- Your risk tolerance, timeline and goals should guide your investment strategy.
- A financial advisor can provide guidance as you build and manage your portfolio.
Investment products used by Eko are not FDIC insured, are not a deposit, are not obligations of, nor guaranteed by Lake City Bank and may involve risk including possible loss of principal.
Investments are: *Not FDIC/NCUSIF insured *May lose value *Not financial institution guaranteed *Not a deposit *Not insured by any federal government agency.
Investing resembles many other financial endeavors. A bit of planning, understanding yourself, and seeking advice can mean the difference between success and failure. To help you get started, we’ve gathered six common investing mistakes and how to avoid them.
Mistake #1: Starting Without a Plan
As with any undertaking, starting with the end in mind leads to successful outcomes. Before you invest, determine your long-term goals—do you want to:
- Save for retirement
- Build a nest egg for your children
- Grow funds for your business
Understanding your financial goals can help you set an investment strategy and determine if you’re staying on track over time.
Mistake #2: Misunderstanding Risk Tolerance
Understanding your risk tolerance is an important part of developing an investment strategy. Risk tolerance refers to how comfortable you are with changes in the value of your investments and can be affected by factors such as your age, timeline and financial situation.
If you have a:
- Low risk tolerance: You may prefer investments with fewer fluctuations, even if they offer lower growth potential.
- Moderate risk tolerance: You may prefer a balance of investments with different levels of risk and potential returns.
- High risk tolerance: You may be comfortable accepting larger market changes for the possibility of higher investment returns.
Your risk tolerance may change over time. Reviewing your investment strategy regularly can help ensure it continues to align with your financial goals.
Mistake #3: Failing to Build a Diversified Portfolio
A diversified portfolio is designed to spread investments across different types of assets to help manage risk. The saying “don’t put all your eggs in one basket” applies to investing because different investments may perform differently depending on market conditions.
Stocks, bonds, mutual funds and cash investments can all play a role in a portfolio. Your asset allocation, or how your investments are divided among different asset types, should reflect your goals, timeline and risk tolerance.
Regularly reviewing your portfolio and rebalancing when needed can help keep your investment strategy aligned with your objectives.
Mistake #4: Not Thinking Big Picture
Investing is a long-term activity designed to help you reach future financial goals like buying a house, building a retirement account or funding a child’s education.
As you monitor your portfolio, keep your investment strategy and long-term goals top of mind. If you focus on short-term investment returns, you’re more likely to make costly buy-sell mistakes that keep you from your ultimate goal.
Mistake #5: Making Emotional Decisions
Market changes can create uncertainty, but allowing emotions to drive investment decisions can lead to mistakes. Successful investing often requires staying committed to your plan rather than reacting to short-term market movements.
For example, buying because you see a stock shooting up most likely means you’re purchasing at an inflated price. Likewise, selling because a stock is taking a dip means you’re losing money instead of waiting for the investment to recover.
Mistake #6: Not Seeking Professional Guidance
Investing can be complicated. A financial advisor understands the market and knows how to guide you to an investment strategy that reflects your risk tolerance and long-term goals.
Lake City Bank offers solutions to help you start investing:
- Digital Investing1, available in Lake City Bank Digital, allows you to start small (with as little as $10) and build a portfolio based on your own choices or select from pre-built portfolios.
- Lake City Investments2 representatives can work with you to create an investment approach based on your goals and needs.
Create an Investment Strategy Built Around Your Goals
Avoiding common investing mistakes starts with understanding your goals, knowing your risk tolerance and creating a plan. By building a diversified portfolio, reviewing your asset allocation and staying focused on the long term, you can make investment decisions that support your financial future.
1Digital Investing is offered through Eko Investments, Inc. Eko’s “Investments as a Service” enables Lake City Bank to offer digital investments directly on our digital banking platform. Investment products used by Eko are not FDIC insured, are not a deposit, are not obligations of, nor guaranteed by Lake City Bank and may involve risk including possible loss of principal. Fees will apply. Click here to access Eko’s disclosures.
Eko Investments Inc is an SEC Registered Investment Advisor. Brokerage services are provided to clients by Alpaca Securities LLC, an SEC registered broker-dealer and member FINRA. Member of SIPC. Securities in your account protected up to $500,000. For details, please see https://www.sipc.org.
Eko does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Eko’s web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.
Eko’s investment advisory services are available only to residents of the United States, age 18 years or older, in jurisdictions where Eko is registered. Past performance is no guarantee of future results. Any historical returns and/or expected returns are hypothetical in nature and may not reflect actual future performance.
An annual management fee of 0.40% based on the value of assets in your Digital Investing account applies. For example, if you have an average of $1,000 in your investment account, you will pay $4.00 per year. The fee is charged monthly in arrears and automatically deducted from your Digital Investing account, so you don’t need to do anything yourself to pay this management fee. This annual management fee is a “Wrap Fee,” which means there are no additional costs related to investing (including deposits, withdrawals and trades).
2Check the background of this investment professional on FINRA’s BrokerCheck.
Located at: 202 E Center Street, Warsaw, IN 46580 (877) 718-9198
Securities and insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Individuals affiliated with this broker/dealer firm are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.
Investments are: *Not FDIC/NCUSIF insured *May lose value *Not financial institution guaranteed *Not a deposit *Not insured by any federal government agency.
Click here to view Cetera Investment Services Important Information and Business Continuity Plan.
This site is published for residents of the United States only. Registered Representatives of Cetera Investment Services LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information please contact the advisor(s) listed on the site, visit the Cetera Investment Services LLC site at www.ceterainvestmentservices.com.
