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The leading investment mistake made by millionaires

25 October 2020

Focusing too heavily on historical returns is the leading investment mistake made by millionaires, new research from deVere Group has found. 

In a survey of 752 investors with investable assets of more than £1 million, nearly two fifths (38%) cited reliance on historical returns as their biggest mistake, closely followed by not seeking adequate advice (35%). In third place (21%) was a lack of diversification.

Nigel Green, CEO and founder, deVere, said: “It’s interesting to see that for the first time in our surveys of this kind the number one investment mistake high-net-worth individuals have made is reliance on guidance from historical returns.

To me, this suggests that wealthy investors are paying attention to how the world has changed dramatically this year and, therefore, investment strategies need to adapt and evolve too in order to reflect the new era we’re living in.

“With fundamental shifts in economies and the markets, the often-quoted industry phrase ‘past performance is not a reliable indicator of future performance’ has perhaps never rung more true than it does today.”

Green said it was encouraging to see that seeking advice was deemed fundamental to success by wealthy investors. He noted that DIY investing and the failure to have a robust, regularly reviewed strategy in place could lead to a “path full of costly pitfalls”.

Green added: “To some, this could appear as if investing your hard-earned money is dangerous. Yet nothing could be further from the truth – not investing is likely to be more dangerous to your wealth over the longer-term. This is shown by the fact that most of the world’s wealthiest people are themselves committed investors.”

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