What investment mistakes can your business avoid?

When it comes to investing, mistakes are inevitable. A big part of investing is taking risks and making mistakes, then learning from them so you can avoid them next time you need to make an investment decision for your business. However, by knowing some of the more common investing mistakes, your business can avoid them or at least be aware of them.

The following are some investment mistakes your business should avoid:

Your portfolio isn't diversified.
Having a diversified portfolio means more than just having a couple of different stocks. Many experts recommend you keep a diversified portfolio for your business that consists of around 20 different companies in 10 industry groups. This can include mutual funds, stocks in different industries (tech, food, etc.), foreign bonds, and bonds with varied maturities. This can help lower the portfolio's sensitivity to fluctuations in interest rates.

While not all your investments will be a success, a diversified portfolio will allow you to lessen the impact of a few losses.

You try and time the stock market.
This is a fairly common mistake that people and businesses make. For example, let's say you have heard of a company or investing idea that has done well recently or is part of the next "big thing," and decide to invest in it. Sometimes it works for them, but many times these hot ideas quickly burn out. Most financial advisors will instead recommend that you and your business stick with companies that have solid track records of success instead of chasing after hot ideas.

In addition, another common mistake businesses make is trying and selling stocks when they think the prices will fall. It is difficult to properly time this.

You don't take risks.
Part of investing is taking risks. One investing mistake that people tend to make is that they don't take risks. While no one wants to lose money, you can still take educated risks by consulting your financial advisor or by studying the market and your investments. There are many resources that can help you to make educated, intelligent risks.

You procrastinate or don't act.
Another large part of investing is timing, and waiting to invest can make it so you don't yield as high a return as you could have by investing sooner. In fact, the FTSE 350 Share Index has given an annual average return of 12.5% for the past 35 years as a result of an expanded economy. So, the sooner your business begins investing, the more time you have to take advantage of it.

You are not sure when to sell
A common mistake some businesses make is hanging onto shares that should be sold and selling shares you should be keeping. Selling a share too soon based on its short-term performance is one common mistake, particularly when the share price falls as a result of something that will be fixed soon (bad press, etc). Selling a good company's shares just because the price has risen slightly can also be considered a mistake.

These are just a few common of the more common investment mistakes your business can avoid. If you are new to investing, a good idea would be to carefully study out your investment choices. It is also a good idea to consult an investment advisor who has experience dealing with businesses that are looking to invest and develop their portfolios.