Not having clearly defined objectives

Building a profitable portfolio that will continue to make consistent long-term returns requires a clear strategy, a level head, and plenty of patience. Unfortunately, many newcomers are prone to knee-jerk reactions after price swings and other short-term market events. It doesn't matter whether your objectives are based on a set of personal ethics or simply an outcome over a defined length of time — make a plan, and stick to it! 

Underestimating timescales

How much money will you need when you retire? How much will healthcare and other important services cost in the future, and how long will you require them? Your investment plan needs to perform well right into your retirement, so always keep timescales in mind when making decisions.

Ignoring the effect of inflation

Continuing from the last tip, it's vital to consider inflation in your long-term strategy. Think about how much a bottle of cola costs in 1965. Now consider the price of the same beverage today. Inflation has averaged around 3% per year since the twenties, which means if you currently require €50,000 per year to cover your living expenses, you'll need over double that amount in around 25 years.

Making investments based on mainstream tips

Have you ever heard the advice that "If a shoeshine boy is giving investment tips, then it's time to get out of the market"? It's a little cliche, but this is sound advice. How many newspaper articles or TV shows have you seen offering tips on everything from real estate to precious metals, shares in famous electronics companies, or even cryptos? The reality is that increased popularity has been factored into the price of most investments long before regular folks get the idea to start a portfolio.

Overlooking the importance of supply and demand

Market forces constantly alter the price of stocks and shares. If more people want to invest in something than those who want to cash in, prices inevitably move up. However, if more people want to sell than buy, prices will fall. Countless indicators can be used to predict costs, and they aren't always accurate, but overlooking the importance of supply and demand is a big mistake.

Changing strategy after experiencing losses

After a significant loss, many newcomers panic and either cash in on their investment to recover as much capital as possible or, if they're feeling slightly braver, wait until they're back to square one before pulling out. These kinds of decisions can be disastrous for your portfolio, and savvy investors know to keep calm during market swings and corrections, sticking to a sound long-term strategy and refraining from making decisions based on emotion.

Summing up

Even the most experienced investors make mistakes. However, veteran investors can quickly recover from bad decisions, keeping their emotions in check and making decisions based on a sound, long-term strategy that factors in their own personal objectives, inflation, and the future state of the markets.