Nov 16, 2022

5 Investment Mistakes to Avoid in 2023

— As the year winds down, it is typical of individuals to take a reflective stance on what was and what was not achieved during the year

3 minutes

By ODP

As the year winds down, it is typical for individuals to take a reflective stance on what was and was not achieved during the year. Investors also, on a quarterly or semiannual basis, can analyze portfolios to rebalance and reevaluate their assets, review what works, and determine the approach to be taken for the coming year. 


In setting your investment strategy for the coming year, it is important to consider the following questions: 


  • What were my financial goals and investment strategy for 2022? 


  • Did my investment strategy work? 


  • How has my financial situation improved or declined? 


  • What are my long or short-term financial goals? 


  • Does my investment strategy need tweaking? 


 

While it is important to focus more on the strategy or asset that delivered the best possible yield, it helps to note the investment mistakes that were made so as not to repeat them. Hence, these are some investment mistakes to avoid in 2023: 


 

  1. Don’t: Invest without a written strategy 


Do: Market trends or performance can dip regularly and unexpectedly, and attention can shift from one asset to another, so an investor must stay laser-focused on their ultimate financial goal. Your investment strategy should be clearly drawn out for easy reference, review, and redistribution. 


 


  1. Don’t: Invest in one asset class 


Do: Diversification cannot be overemphasized when it comes to investment. The market can be unpredictable and prone to sharp changes, so having various asset classes serves as a buoy that shields your portfolio from hitting absolute rock bottom or taking a total loss. A cocktail of assets, such as real estate, equities, long-term investments, etc., in your portfolio creates a system where you are continuously earning returns but also allows you to redistribute your fund allocation based on market performance. 


 


  1. Don’t: Disregard financial experts 


Do: Money can be a touchy subject that individuals like to keep private, but just as you would see a doctor for health checks, financial experts are there to help you diagnose and maintain your financial health. Financial experts, like financial advisors or fund managers, are not there to strip you of your financial veto power; instead, they empower you with knowledge and a strategy to boost your financial wellbeing and bring you closer to your goals. Click here to learn what you should expect from your financial advisor or fund manager. 


 


  1. Don’t: Invest without setting up a significant emergency fund 


Do: When it comes to personal finance, saving and investing are like a tag team of superheroes. In internet street terms, you save today, tomorrow your savings will save you. Your investments and savings are concurrently crucial toward building financial success - your investments help you build your wealth base while your emergency fund acts as a cushion against the unexpected that can eat into your regular income. Set up your fund allocations in a way whereby none of these categories are neglected  


 


  1. Don’t: Attach emotions to investing 


Do: Successful investors, like Warren Buffett, have mastered the art of detaching their emotions from their investments. Their investment decisions are always in line with their overall investment ideology, regardless of the sway of the market. As most people would like to say, emotions can be fickle at times and can lead to barely thought-out decisions. Resist the urge to panic buy or sell with every movement of the market; make your investment decisions or move on the foundation of researched information, asset performance history and in line with your financial goals.  


 


Above all, the biggest mistake you can make in 2023, as it pertains to your financial future, is not investing at all. The best part about investing - asides from the extra money, of course – is the control it gives you, no matter how little effort or resources you think you are putting in. Little steps bring you closer to the future and lifestyle you envision. 


For us at GDL, it is more than just an investment; it is a commitment towards bringing you closer than you thought possible, to the lifestyle you want and the goals you have drawn. In 2023, we are encouraging you to not just imagine the life of financial freedom, but also grab it!  


 

Join the movement to financial freedom here and click here to glean insightful gems for your personal finances. 

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