Millionaires top 5 investments mistakes to learn from

By Dian Vujovich

Millionaires aren’t that different than the average investor. Except, of course, they’ve got oodles of more money to play around with. But the amount of money someone has doesn’t insure that they are smart investors. Nope. Richies make the same investment mistakes as everyone else does.

I can’t tell you the number of times I’ve heard that we’re supposed to learn from our mistakes. And that’s good advice no matter how or where we’ve made those mistakes. From eating the wrong foods to hanging out with the wrong crowd, do things that cause problems for long enough and, if you’ve got any working gray matter at all, you’ll eventually see a plus-side opportunity to learn from your choice-based mistakes.

Before I was ever a stockbroker the first investing tip I got was from a student in a night school class. The student was an older guy and I was teaching a beginning calligraphy course. His tip: Invest in gold. I followed his advice on the gold stock suggested, opened a brokerage account and lost most of my money.

I learned a lot from that experience. On the dumb side, two lessons pop out: First, don’t follow through on an investing tip from someone you don’t know. Second, if you choose to, at the very least do some research on the company, its financials etc., etc.

On the not-so-dumb side, I opened a brokerage account. That was something I hadn’t done before and had always wanted to do.

By now you’re probably waiting for me to write that the guy offering the tip was a hugely wealthy individual. But, I have no idea if that was the case or not. What I do know is, investment tips can turn into investing mistakes no matter where they come from. A unresearched tip heard at a private club like the Everglades or Beach Club can nick your investment portfolio as much as one heard learning about calligraphy down strokes.

The deVere Group, a global independent financial consulting group, asked 880 investors with investible assets of $1.5 million or more—100 of them from the U.S.—what their number one investing mistake was. The answer: not diversifying their portfolio.

Mistakes two, three, four and five, in that order, were “investing without a plan; “making emotional decisions”; “failing to regularly review the portfolio”; and “focusing too heavily on the history of an investment’s returns”.

As you can see by the survey findings, it’s clear that the forever told investment advice we’ve all heard for years–diversify, invest with a plan, keep emotions out, review your portfolio and don’t look at past performance as a gimme for future returns—isn’t always followed by the wealthy but ought to be. And those five tips ought to be followed by everyone else—wealthy or not.