Where do you go for financial advice? More specifically, where do you go to implement a faith-based financial plan? The key to planning is to minimize mistakes and have an end goal in mind. The majority of the common mistakes I see being made could have been prevented by having a solid plan in place.
There are many common mistakes made because of insufficient preparation. If you took an exam and did not study, would you pass? If cities did not have emergency plans and there was a natural disaster, would evacuations remain orderly? Proper planning can help prevent common mistakes. People often make critical errors that could have been avoided with a little planning. Here are some of the most common mistakes that I see on a day-to-day basis:
1. Making investment decisions based on emotions (greed or fear) rather than the facts.
2. Choosing investments that are not suited to personal goals or investment time horizon. Often people invest in assets that are too aggressive or too conservative based on when they will need to withdraw from their investments.
3. Failing to diversify assets by putting all the eggs in one basket. I often see people who hold all of their wealth in a few individual stocks or they have mutual funds that do not provide enough variety.
4. Reacting to short-term events and not to long-term trends.
5. Trying to “time the market”–deciding when to be in or out of the stock market.
6. Buying “hot” investments with no sound basis for the decision.
7. Allowing fees, expenses, and/or commissions to become the major factors in making an investment decision.