Five Star award winner Jeffrey W. Keefe

5 Investment Mistakes Not to Make

The biggest investment mistake people make is not investing in the first place. While simply putting money in the market is a positive first step, there are many ways to curb the effectiveness of that investment by investing in the wrong things for your needs or taking advice from the wrong people. To get your investments off on the right foot and grow your portfolio, learn five investment mistakes not to make.

Getting trading and investing confused

Those internet ads for day traders can be appealing: they make it look easy to make money off the stock market. However, most people's needs are better met by investing rather than trading.

Confused about the difference? Investing is a strategy that involves purchasing assets for the long term (decades, often) while trading is a short term strategy where people buy and sell in a matter of weeks, days, or sometimes hours. Since fees associated with trading add up quickly and few people really know how to time the market, investments pay superior rewards in most cases.

Expecting target-date funds to do all the work

Target-date funds shift the balance of investments from growth stocks to conservative bonds as you approach retirement. Like robo advisors, they basically do all the work for you, promising a low-stress, set-it-and-forget-it investment strategy. While it's smart to hold some exposure to these funds, they're geared for a generalist and may not reflect your unique circumstances. These funds tends to have above-average fees as well. Do the research to decide how much exposure to these funds makes sense for you, rather than overinvesting for the sake of convenience.

Not understanding diversification

Diversification is a golden rule of investing. To lower your risk, you must spread out your investments rather than concentrate on a single sector that appeals to you. There are several ways to diversify: by industry, by country, and by asset type. While investors can go deep with diversification, simple approaches exist, such as purchasing index funds or allocating a percentage of your assets to international markets. Cover the baseline, then explore more sophisticated ways to diversify your investments at a later date.

Taking investment advice from friends and family

Your friends and family probably aren't the best people to take stock tips from, unless they work in the finance industry. Yet many people listen to their relatives or friends when it comes to investing, saving for retirement, and other topics. To protect your wealth and grow your legacy, only take advice from financial professionals.

Hiring a financial advisor who isn't a fiduciary

Think your financial advisor is working for you? Unless they're a fiduciary, they could be offering investment advice that actually lines their pockets, not yours. Fiduciaries are legally bound to put a client's interest first and act in the client's best interests at all times. While you'll still pay them for their advice, you will enjoy peace of mind knowing that you aren't overpaying, and that their advice is truly in your best interest.

Review your investment portfolio for these common mistakes, then correct any investments that aren't helping your financial goals. Moving forward, invest using the lessons learned from these mistakes to develop good habits and position yourself for a bright future.

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This award was issued on 9/1/24 by Five Star Professional (FSP) for the time period 12/12/23 through 7/9/24. Fee paid for use of marketing materials. Self-completed questionnaire was used for rating. This rating is not related to the quality of the investment advice and based solely on the disclosed criteria. 1094 New Hampshire-area wealth managers were considered for the award; 87 (8% of candidates) were named 2024 Five Star Wealth Managers. The following prior year statistics use this format: YEAR: # Considered, # Winners, % of candidates, Issued Date, Research Period. 2023: 1,017, 89, 9%, 9/1/23, 12/12/22 - 6/30/23; 2022: 979, 87, 9%, 9/1/22, 12/20/21 - 6/17/22; 2021: 943, 96, 10%, 9/1/21, 11/30/20 - 6/25/21; 2020: 928, 91, 10%, 9/1/20, 12/9/19 - 7/1/20; 2019: 928, 85, 9%, 9/1/19, 11/19/18 - 7/10/19; 2018: 955, 74, 8%, 9/1/18, 12/26/17 - 7/17/18; 2017: 739, 89, 12%, 9/1/17, 12/27/16 - 7/6/17; 2016: 666, 158, 24%, 8/1/16, 2/6/16 - 7/19/16; 2015: 853, 166, 19%, 9/1/15, 2/6/15 - 7/19/15; 2014: 1045, 189, 18%, 9/1/14, 2/6/14 - 7/19/14; 2013: 1049, 204, 19%, 9/1/13, 2/6/13 - 7/19/13; 2012: 743, 170, 23%, 9/1/12, 2/6/12 - 7/19/12.

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Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. The award is based on 10 objective criteria. Eligibility criteria - required: 1. Credentialed as a registered investment adviser (RIA) or a registered investment adviser representative; 2. Actively licensed as a RIA or as a principal of a registered investment adviser firm for a minimum of 5 years; 3. Favorable regulatory and complaint history review (As defined by FSP, the wealth manager has not; A. Been subject to a regulatory action that resulted in a license being suspended or revoked, or payment of a fine; B. Had more than a total of three settled or pending complaints filed against them and/or a total of five settled, pending, dismissed or denied complaints with any regulatory authority or FSP's consumer complaint process. Unfavorable feedback may have been discovered through a check of complaints registered with a regulatory authority or complaints registered through FSP's consumer complaint process; feedback may not be representative of any one client's experience; C. Individually contributed to a financial settlement of a customer complaint; D. Filed for personal bankruptcy within the past 11 years; E. Been terminated from a financial services firm within the past 11 years; F. Been convicted of a felony); 4. Fulfilled their firm review based on internal standards; 5. Accepting new clients. Evaluation criteria - considered: 6. One-year client retention rate; 7. Five-year client retention rate; 8. Non-institutional discretionary and/or non-discretionary client assets administered; 9. Number of client households served; 10. Education and professional designations. FSP does not evaluate quality of services provided to clients. The award is not indicative of the wealth manager's future performance. Wealth managers may or may not use discretion in their practice and therefore may not manage their clients' assets. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by FSP or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by FSP in the future. Visit www.fivestarprofessional.com.