Procrastination or inertia
“I can’t afford to invest right now, I’ll do it next year once the company reinstates bonuses.” Sound familiar? The problem with delaying is that it reduces the amount of time your money has to work for you and also reduces the long-term advantage of pound cost averaging. If you had invested Rs 2,000 per year over a decade, the value of your investments at the end of the time period would be far greater than had you started investing Rs 4,000 per year halfway through that period.
An additional benefit of long-term investing is compound interest, exemplified by the oft-quoted trick question of whether you would rather have £1,000 per day for 30 days or a penny that doubled in value every day for 30 days. The savvy investor would pick the doubling penny and be looking at £5 million at the end of 30 days versus £30,000 if they opted for the £1,000 per day.
Hopefully you’ve noticed that these investor mistakes all lead to the same few suggested solutions: