Your Money - make sure you time your investment move right
Investing behaviour varies radically from individual to individual, every bit as much as personality and physical appearance.
The result is a huge spectrum of financial habits ranging from hyperactive to comatose, and from wildly adventurous to painfully cautious. To invest happily, and hopefully successfully, it pays to understand what style suits you and follow it; but also to be aware of the flaws that may go with your particular strategy and take action to correct them.
Here are some typical investor types, along with the mistakes each often makes:
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Investing behaviour varies radically from individual to individual, every bit as much as personality and physical appearance
YOU JUST CAN’T SIT STILL
Do you obsessively check SMS alerts on share prices from your broker, agonise over decimal point currency moves on www.xe.com and suffer withdrawal symptoms if you can’t check prices on www.goldprice.org?
If so you are in the hyperactive investor camp and you probably switch in and out of different investments at the slightest excuse. Well, whatever floats your boat. But remember that trading fees will eat into whatever profits you might make and that sudden price move you just took advantage of might be reversed a minute later. Try to slow down a bit.
RIGOR MORTIS IS SETTING IN
Did you buy some units of a fund 15 years ago and have never once wondered if you should sell them, even though you don’t have the slightest idea what the fund is invested in and whether its value has gone up or down? And does any money you save just pile up in your deposit account, because you can’t decide what to do with it?
This laid back attitude is not necessarily disastrous; the fund could be a good one and your deposit account won’t lose you money like shares might. But you need to wake up. If you look around a bit, you might find better places for your money.
YOU DON’T MIND AN ADVENTURE
Do you just love the idea of buying shares in, say, a Turkmenistan gold mining company that hasn’t actually found any gold yet, offered to you by someone who cold calls you in the middle of the night on your mobile? Some people get a thrill from this kind of investment. They’re probably crazy. But who knows, it might be a good deal…
HELLO, INVESTMENT NERD
When wondering whether to buy a company’s shares, do you read its annual report cover to cover, then compare it to the previous year’s, then read the opinions of 15 research analysts and watch a video of the chief executive making a speech, and then decide that you don’t have nearly enough information to make a decision? If so you suffer from the illness of overanalysing. Sometimes you just have to stop thinking and go for it.
So by all means follow your instincts when you invest. Just remember to keep them under control.
Bob Parker is managing director of Holborn Assets. If you have a question for Bob, email him at bob@holbornassets.com
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