3 terrifying investing mistakes to avoid this Halloween

Posted on

You might see the Halloween season as the perfect opportunity to enjoy some horror films, dress up in scary costumes, and carve spooky pumpkins with your family.

Yet, one area where you won’t want any frightening surprises is your financial plan. Unfortunately, when creating an investment portfolio there are some simple mistakes that could make achieving your financial goals a nightmare.

Read on to learn three terrifying investment mistakes to avoid this Halloween.

1. Letting fear and panic guide your decisions

Halloween is a time for scares, but it’s important that you don’t let fear guide your decisions when investing.

In today’s media climate, this can be difficult because you may be exposed to lots of “noise” from the news, social media, or other investors giving their advice. When you hear news of current events that could affect markets, or warnings from so-called experts about an “impending crash”, it’s easy to panic.

You might be especially concerned during a period of volatility when you see the value of your portfolio fall. If you let fear and panic take over, you might be tempted to sell your investments to avoid further losses.

However, this may not be the most sensible course of action because markets typically bounce back, and you could miss out on further growth in the future if you sell prematurely.

For example, the 2008 financial crisis caused market volatility around the globe. Indeed, according to the London Stock Exchange (LSE), the FTSE 100 fell by more than 40% between April 2007 and February 2009.

If you held investments during this period, you may have seen significant short-term losses, and you likely would’ve been concerned.

Yet, markets recovered relatively quickly and in the 10-year period between April 2008 and April 2018, the FTSE 100 grew by 15.92%.

If you had panicked and sold your investments after the initial downturn, you would have missed out on this growth. Conversely, if you held your investments over a longer period, you would have generated positive returns, despite the short-term fall in the value of your portfolio.

That’s why it’s important to remain calm during a market upset and avoid letting fear guide your decisions.

2. Failing to diversify your portfolio

Failing to adequately diversify your portfolio is another potentially terrifying mistake you could make when investing.

It may be particularly tempting to invest heavily in popular stocks such as the “Magnificent Seven” – a group of high-performing tech stocks that make up a significant portion of the US market. In the past few years, these companies have seen significant growth and if you invested most of your wealth in them, you likely would have generated notable returns.

However, you can’t tell what the future may hold and if the tech industry suddenly experienced a period of volatility, you could get quite a fright when the overall value of your portfolio falls.

That’s why it’s important to diversify and spread your wealth across different investment types, geographical regions, and industries.

When you diversify, gains from elsewhere could help you offset losses when certain investments fall in value. Additionally, investing widely could give you more opportunities for growth from emerging markets in the future.

If you’re concerned that your portfolio isn’t adequately diversified, we can help you make the necessary adjustments and manage the level of risk you adopt.

3. Trying to “time the market”

In the past, markets have typically grown in the long term. So, if you invest your wealth and leave it, you can normally ride out any short-term fluctuations. This means, over time, you could generate the returns you need to achieve your goals.

Unfortunately, some investors take a short-term view and instead try to increase their returns by “timing the market” – attempting to invest in certain stocks when prices fall and sell when values increase.

For example, during a period of volatility, you might predict that your portfolio is likely to fall in value significantly, so decide to sell now before this happens.

Alternatively, you may attempt to guess when markets will reach their bottom, so you can invest heavily and benefit from significant growth during a period of recovery.

However, you can’t see the future. As a result, your attempts to time the market could fail, meaning that you prematurely cash out investments. Additionally, if you wait for the “right” time to buy into the market, you could be missing opportunities for growth.

This is because, while you might avoid losses on days when the markets perform badly, you could also miss out on growth when stocks perform well.

For example, figures from the Visual Capitalist show that if you had $10,000 invested in the S&P 500 every day between January 2003 and December 2022, your total investment would be worth $64,844 by the end of this time frame.

Yet, if you missed the 10 best-performing days, your total investment would fall to $29,708. Missing the 20 best days would leave you with only $17,826.

That’s why it may be beneficial to be patient and simply leave your wealth invested in the long term instead of trying to time the market.

Get in touch

We can help you manage your investment portfolio and avoid these terrifying mistakes. Our support could be especially valuable when navigating the expected market volatility as a result of the US elections.

Email enquiries@blackswanfp.co.uk or contact your adviser on 020 3828 8100.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

 

We aim to keep our clients up to date on interesting and relevant financial news.

You can sign-up to receive our monthly newsletter by email, even if you’re not yet a client. Sign-up using the form below.

Client testimonials

I have always found Black Swan to be caring and understanding of my quirky lifestyle. I always feel they try to get me the best returns while respecting my current needs.

Sally Muir

A client since 2011

We would be very happy to recommend the support and service we receive.

Valerie Locks

A client since 2010

I have always been completely useless regarding finance - thankfully our financial adviser is not! I've retired with far more than I ever expected and investments continue to grow safely. So - thank you!

Bernadette Jane Warner

A client since 2000

Very happy with the professional service I have received and feel a lot happier now with my finances put in order.

Martin Field

A client since 2011

Julie Cooper was recommended to me by a work colleague. She has been very helpful, professional and has explained everything well. I would definitely recommend her services to anyone else who are interested in a financial review.

Steven Rooke

A client since 2018

…Service has been first class.

Hugh Fells

A client since 2012

My face to face meetings with Rob Young and Jessica Lyons have always been very open and understandable. My questions have been answered clearly and I have left feeling that my financial matters are in good hands.

Sandra Jack

A client since 2000

[A] safe pair of hands in a complex financial world.

Gary Middlehurst

A client since 2003

A reliable company with good communication skills and good knowledge of the financial markets.

Alan Evetts

A client since 2014

Maureen Pembridge is a long-time trusted advisor to our family. The market might fluctuate but her attention to detail is consistent.

Linda Burnard

A client since 2000

I am pleased to recommend Julie as a trustworthy financial advisor. She explains financial jargon in plain language, and always listens carefully to my particular financial needs and has helped me make the best of my savings.

Carolann Samuels

A client since 2010

I have always been satisfied with the way that Black Swan has handled my account. And I have always found the staff very helpful whenever I need to call the office.

Robert Anthony Matthews

A client since 2012

An excellent personal service from a person I know and trust.

Michael Dalton

A client since 2010

I am getting a very good services from Black Swan, they have got my investments sorted out which was in a bit of a mess.

Roy Jakens

A client since 2012

A good, efficient team providing clear ideas to shape a winning strategy.

Adrian Michael Levenstein

A client since 2011

Black Swan is a company to be trusted, with friendly staff and professional advisors.

David Brian Jennings

A client since 2017

I have been with Black Swan for many years. I have never wished to change anything. They give a good straight forward service.

Martin Barrett Brooks

A client since 2010

Andy Peters has been invaluable in firstly combining several pension pots and then giving excellent investment advice. It has given us a great deal of comfort to know that our financial affairs are in such good hands.

James Guillum Scott

A client since 2014

I find my financial advisor easy to talk to and feel that she understands my lifestyle. She is always available for help when I need her and explains in words that I can understand.

Margaret Ena Glasgow

A client since 2000

Andy is a first rate Director, excellent communicator and leader.

Ross Perry

A client since

Black Swan Financial Planning and Andrew in particular, are very clever at working out how risk averse we are, and coming up with solutions that we feel comfortable with. We are happy in the knowledge that we can continue to enjoy a comfortable retirement. Andrew Peters is a very, very friendly person who is great to chat to and easy to deal with. He explains things very clearly in layman’s terms, and if we still don’t understand, he explains it until we do!

Alan & Jane Dyer

Clients since 2012

We have always found Rob [Young] to be very approachable and knowledgeable. We have every confidence in the advice given and feel comfortable with the decisions we’ve made. There are certain opportunities that we wouldn’t have known about if Rob hadn’t brought them to light, which makes the advice good value for money as far as we’re concerned.

Peter & Pauline O’Halloran

Clients since 2013

Rob [Young] is extremely knowledgeable. I knew nothing about the different types of trusts which will not only secure my income in retirement, but also leave a legacy for my children. I’m glad that I sought his advice when I did.

Sarah Wilson

A client since 2015

I am extremely happy with the service afforded to me by the company and my adviser Julie Cooper.

Geoff Coxell

A client since 2010

My wife and myself have been dealing with Black Swan for a number of years. We have met with different representatives from the company over the years and have found all very helpful in their own way. We met with James [Anderson] a few years ago and found him very helpful and knowledgeable. He keeps in contact with us on a regular basis. We find the Company information very helpful and we feel very secure with our finances.

Andrew Kirchen

A client since 2015

I have always found my adviser to be easy to contact, very professional in his approach, yet friendly and understanding. I have a sense of an experienced company behind him, really on the ball financially and with good standards.

B McBean

A client since 2011

Partner with the most reliable and experienced team of advisers

Enter your details & we'll be in touch to discuss your needs.
Alternatively, contact us directly and speak to a member of the team.

    Subscribe to our newsletter