60% Of Investors Have Over 10% Of Their Portfolio In A Single Stock

0
60% Of Investors Have Over 10% Of Their Portfolio In A Single Stock

Over 90% of investors have mistakes in their portfolios, according to a recent study. Many of the most common investor mistakes are easily corrected, but you have to know about them first before you’ll realize that they’re costing you money.

Play Quizzes 4

Investor mistake #1: Diversification

Automated investment service SigFig conducted a study to find out what the most common investor mistakes are. The firm tracked more than $350 billion worth of assets and discovered that nine out of ten investors have poor diversification in their portfolios, and this is coming a quite a high cost. Last year, one-third of average investors ended the year with returns that were either in the negative or at zero.

London Value Investor Conference: Joel Greenblatt On Value Investing In 2022

The first London Value Investor Conference was held in April 2012 and it has since grown to become the largest gathering of Value Investors in Europe, bringing together some of the best investors every year. At this year’s conference, held on May 19th, Simon Brewer, the former CIO of Morgan Stanley and Senior Adviser to Read More

The biggest issue was investing in single stocks, as six out of ten investors have over 10% of their portfolio invested in one stock. Another big investor mistake in the area of diversification is being biased toward their home country. SigFig reported that 60% of investors had less than 10% of their equity portfolio invested in international stocks.

Investor Mistakes - Diversification - SigFig

The firm also found that investors tend to have a high concentration in equities, with half of investors having more than 80% of their portfolios in stocks.

Investor mistake #2: Fees

Additionally, SigFig claims six out of ten investors pay too much in fees. The firm identifies “high-cost” funds as those with an expense ratio of at least 0.5%. The firm reports that 60% of investors have at least one “high-cost” fund.

Also investors who use a financial advisor pay, on average, 1.3% of their assets in management fees, which amounts to an average of $7,000 per year.

Investor mistake #3: Neglect

And third, the firm reports that one-quarter of investors’ portfolios have signs of one of two extremes: neglect or overtrading. According to the study, 27% of investors have at least 10% in idle cash in their portfolio, while 25% of investors haven’t rebalanced or contributed to their portfolios within the last year.

Also 20% of investors have a portfolio turnover rate of at least 100%. Interestingly, this study included both men and women, but another recent study indicated that women tend to churn their portfolios less than men, making this issue more of a male problem than a female one.

Investor mistakes are costing us

According to SigFig, the average investor underperformed a portfolio that was 60/40 balanced by an average of 60%.

underperform


Screenshot_200Screenshot_202Screenshot_201

Updated on

Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@valuewalk.com.
Previous article Katherine the Great vs the activist investors
Next article BlackBerry Ltd Care Protection Plan For Leap, Classic, Passport

No posts to display