It’s great to have investing goals—they help guide your savings and provide motivation to continue investing throughout the year. Considering how complex investing is today, you are probably asking yourself where to begin when setting investing goals. Plus, it’s easy to make mistakes that could dramatically alter your results.

Avoiding these costly investing mistakes can help prevent you from feeling disappointed when reviewing your statements at the end of the year.

1. Investing Without Purpose

Why are you investing? Is your sole focus to maximize your nest egg for retirement, or do you have several long-term goals you’re investing toward, such as your children’s college costs? Are you investing for a shorter-term goal, such as a renovation on your home or this year’s family vacation? If you don’t know the answers to these questions, it’s very difficult to create short-, medium- and long-term buckets to effectively manage your investments. Depending what you are saving for and how far away that goal is will dictate how much you need to save and where to invest these savings.

2. Allowing Emotions to Dictate Your Decisions

It’s incredibly difficult to make decisions about your money that are not affected by your emotions. Large gains in the markets can lead to overconfidence, while a correction may cause you to exit the market and stay on the sidelines for too long. Working with a financial advisor who can provide objective advice could help take the emotions out of managing your investments.

3. Chasing Performance Based on Recent Strong Returns

Arguably, the most important rule of investing is: “Past returns do not guarantee future returns.” It’s easy to look at the big winners from last year and assume those results will continue for the foreseeable future. The truth is that every year there are investments that performed very well one year, only to suffer significant losses the next.

4. Forgetting to Review Your Portfolio

Once you find your proper asset allocation, it’s important to not make a habit of “setting and forgetting” your portfolio. Ignoring your holdings can lead to asset drift—the gradual shift in asset allocation as some asset classes outperform others. Over time, this could cause your portfolio to have a significantly different amount of risk than you originally planned for. Rebalance your portfolio on a regular basis to keep asset drift in check and help ensure you’re not exposed to too much risk.

5. Incorrectly Benchmarking Your Returns

Once you establish your investing goals, how do you evaluate how well your portfolio is doing? The usual answer is to compare your results to a major market index. This is often a mistake; no single index is truly indicative of the health of the overall market. Plus, a single index is not likely accounting for a diversified portfolio. Consider this: If you have a portfolio of stocks and bonds, an index that only tracks stocks isn’t accounting for bond performance. Instead, evaluate whether your investments are actually helping you reach your personal goals on time and if your investments reflect your risk profile and investment style.

These mistakes can easily trip up investors who aren’t looking out for them. Remember your goals and focus on the long-term strategy to help get you to where you want to be. Working with an experienced advisor can provide an objective viewpoint to help you avoid these mistakes from derailing your plans. Planning ahead now can help you put guardrails in place to avoid these investment goal mistakes.


Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

John O'Brien

John O'Brien

Senior Vice President, Financial Advisor

CFP®† John has more than 30 years of experience in the financial services industry, bringing a strong background in investment management, portfolio construction and retirement income strategies to his role as a financial advisor. John enjoys helping his clients understand that a successful financial plan requires much more than making stock selections and supports them in employing strategies that help them achieve their life goals. As a CERTIFIED FINANCIAL PLANNER™...Read More