3 Common Investing Mistakes That Can Ruin Your Portfolio

Making mistakes can be passed of as being human but when it comes to investing, they can prove to be really costly.

A big reason why a number of investors make mistakes is because they think they can beat the market.

Specifically, it’s because they seek a better than average portfolio from their stocks that causes them to make these mistakes that hurt their portfolios in the long-term.

Having said that, here are 3 investing mistakes that you might be making:

#1: Only investing in funds within the country

It’s a good thing to be patriotic. However, it isn’t a good idea to let that influence your investment strategy. That said, this is a common mistake that most people make since 60 percent of investors has less than 10 percent of international equities in their portfolio.

It must be pointed out that non-US equities make up almost 51 percent of the global market.

#2: Investing a lot in a single stock

According to an analysis made by SigFig, six out of 10 investors invest more than 10% of the money in their portfolios in just one stock. If that’s not enough, 15 percent of investors invest more than half their money in two stocks. This is not wise at all.

While most of these were employees of companies that gave stock options, the trouble that Washington Mutual and Enron employees faced is something to remember.

#3: Paying professionals more to beat the market

From the 1411 exchange-traded funds that are available as of the end of 2014, investors have plenty of options to build a diverse, low-cost portfolio.

While a number of funds charge rates as low as 0.05, there are investors (about six out of 10) who have one fund that has an expense ratio of 0.50.

No matter what actively managed but expensive funds do not outperform low-cost index funds. So, it’s to redo the math!