Financial mistakes to avoid in 2016

A new financial year often brings hope for a better one than the last – and April is the month for planning that year. However, if you don't plan and act appropriately, you'll soon be resenting 2016 and longing for a better 2017…

So, to get you started in the right direction, here are 6 investment mistakes to avoid throughout 2016:

Action over procrastination. If your finances run on autopilot, the best you can reasonably hope for are mediocre results. Identify your priorities, analyse your investments and their performance over time, and have a long-term financial strategy.

Follow a plan. If you have a plan but don't stick to it, you aren't much better off than having no plan at all! Short-term temptations are always available. If you alter your financial plan, have a valid, well-thought-out reason. Don't hesitate to seek help with a financial plan from us here at Robertson Associates, and resist the urge to abandon it for a perceived short-term gain.

Sunk cost fallacy. In economics, a sunk cost is any cost that has already been paid and cannot be recovered. The sunk cost fallacy is where your decisions are tainted by the investments you accumulate, and the more you invest in something the harder it becomes to abandon it. The greater the size of the sunk investment, the more people tend to invest further, even when the return on added investment appears not to be worthwhile.

Avoid herd mentality. It is amazing how investors get taken in by the herd mentality. When markets are surging furiously, everyone wants to buy stocks; when the markets begin to plummet, investors flock to sell their holdings with or without any valid reason. You need to be able to identify value and pursue it moving against the herd, and always investigate in detail before making a purchase.

Thinking long-term. People give all kinds of reasons why they can’t or don’t need to plan farther ahead financially. If they’re doing well, some people fail to see the need for thinking farther ahead. Regardless of your situation, if you want long-term success, you need to start thinking further and further ahead and planning accordingly.

Don’t fool yourself. Assess your finances honestly. Do you hang on too long to bad investments, unable to move on? Do you impulse buy? Are you terrified of risks? If you can't be objective about your finances, we can provide you with a professional, straight talk.

In essence: Make a plan and stick with it, do due diligence with all your actions, take a long view, understand value, and be honest with yourself.

If you stick to these plans all year, then you're setting yourself up for an even better 2017!

At Robertson Associates we know our numbers, and yours. We are always happy to talk finances so feel free to get in touch on 0132 430 9018.