Common Investor Challenges


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Common Investor Challenges

  1. 1. Click to edit Master title styleCommon Investor ChallengesNot having a clearly defined objective Not investing globallyWhether building a new house or an investment portfolio, you need A well-diversified portfolio should include assets with low correlation toto establish a sold foundation. Gaining an in-depth understanding of each other. Many American investors tend to learn to lean towardyour unique financial goals is key to this process. Your personal domestic securities and avoid global investing opportunities altogether.portfolio investment objective will take into account and your risk By investing only in U.S. stocks, you could miss out when foreign stockstolerance and time horizon. Specific strategies can be created to perform well.address a single objective or a combination of objectivessimultaneously. Being led by your emotionsImproperly judging risk Every day you hear new theories or speculation about the direction of the stock market from the media, friends, family and coworkers. It can beIn general, the longer the time horizon of your investments, the more challenging to sort through differing opinions, filter out the noise andrisk you can take on. Many investors, fearing even a little amount of stay focused on your long-term investment goals. Many investors findrisk, focus on only investments that address short-term volatility themselves preoccupied with the fear of investment losses andeven though their time horizon may be 20 years or more. The result is mistakenly make costly investment decisions.a poorly performing portfolio in relation to their investing goals andtime horizon. Being overconfident in a single stockPaying too much in taxes Relying solely on your intuition or creating attachments to specific stocks or sectors without reading impartial analysis and reports canStructuring your investments properly by mitigating the effect of lead to poor investing decisions. For example, employees of a firmtaxes on your portfolio can help preserve and ultimately grow more of will often make excessively large allocation’s to their employersyour investments over time. Not using tax-efficient money managers stock, believing they can better predict the stock price because ofor strategies their intimate knowledge of their firm. This is not always true, as demonstrated by cases such as Enron. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Securities offered through LPL Financial, Member FINRA/SIPC