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Have you ever made one of the following mistakes? Could it be that you continue to repeat your mistakes? The following summary of top mistakes and suggested solutions from the CFA (Chartered Financial Analyst) Institute may help you avoid repeating history!

1. You have no strategy

If this is you, here’s a good start: pinpoint your risk tolerance in plain language and commit to a time frame for how long you will invest your money before you will need it.

2. You buy high, sell low

Determine at the outset how you’re going to decide when to sell (consider selling after you’ve made a certain percent return, for example). We all know it can be really tough to wait for the recovery to recoup losses after a stock goes way down in price, and maybe even harder to sell when a stock’s price is high, but this discipline will keep your investments in line with your goals.

3. You have rapid turnover of investments

Be patient. Too-frequent trading reinforces a frantic focus on short-term stock performance over long-term fundamentals.

4. You act on tips

Ignore the trends. If you’ve heard the hot tip, chances are an awful lot of people heard it before you and have already acted.

5. You don’t know the fees you pay

Read the small print. Know how the mutual fund company compensates the advisor that recommended the purchase (called a trailer), for example.

6. You’re overly focused on tax implications

Maintain perspective. Be aware of your tax liabilities and make strategic decisions regarding asset allocation, but make good investment decisions your top priority. To hold on to investments to avoid capital gains tax, for example, could lead to poor investing decisions and lost opportunities.

7. You have unrealistic expectations

Prepare for the worst. Investors willing to take risks in pursuit of above-average returns are those who will most often find themselves disappointed by sudden market downturns. Expect consistent returns averaged out over the long term and focus on reasonable returns on fundamentally sound investments.

8. You neglect your portfolio

Be consistent. Don’t let discouraging markets and uncertainty keep you from being proactive. Set up a regular contribution program and schedule regular check-ups with your advisor. This will help you stay focused on your goals and enable you to fix problems before they derail a solid investment strategy.

9. You don’t reflect on your risk tolerance

Know yourself. Knowing how much money you can stand to lose is a difficult thing to consider. Understanding your limits is the first step in assessing how actively and aggressively you want to get involved in investing. Consider thinking about risk as degree of uncertainty.

Given recent economic conditions and government interventions, it would be a good idea to consider the potential impacts on your long-term investment planning. Now may be a good time to think about your portfolio return above the inflation rate, in real terms, and to prepare for the risk of higher inflation.

Most investors would agree that preserving and even enhancing their purchasing power over time is a desirable goal. Different investments will serve you differently in your ability to clear the inflation hurdle.

Cash

Cash in your savings accounts and money market funds will often yield less than the inflation rate, reducing your overall return. While cash reserves are necessary, it may be beneficial to consider high quality short-term bonds for this purpose. The slightly higher returns of bonds and bond funds can help you keep pace with inflation.

Bonds

Medium and longer-term bonds typically do poorly in periods of higher than expected inflation for two reasons. First, inflation erodes the purchasing power of the interest income you receive from your bonds. Secondly, unexpected increases in inflation typically result in rising interest rates, which lower the price of the bonds you hold (this only matters to you if you think you’ll sell your bonds before they mature).

Inflation-protected bonds are an important exception to the above. These bonds protect investors against unexpected inflation because they promise to pay a real rate of return plus the actual inflation rate. Their special characteristics make them useful for investors who place great importance on preserving purchasing power.

Stocks

Stocks are generally thought of as good inflation hedges over the long run as companies are able to charge higher prices to offset rising costs. Stock returns, however, may lag inflation, especially over shorter time periods.

The recent decline in stock markets should underscore that equity investing is not for everyone or for every investment need. Matching goals and risk tolerance with the appropriate mix of investments is the key.

Commodity Funds

Sophisticated investors may address concerns about inflation by investing in commodity funds. The value of these funds fluctuates with the prices of physical goods such as agricultural products, metals and oil.

Some commodity funds invest in companies that produce commodities while other funds invest directly in the underlying commodity. In general, commodity funds may serve the interests of longer-term sophisticated investors, but often represent only a small percentage of their portfolio.

Investing in the midst of Uncertainty

Prudent investment planning suggests constructing a portfolio that will meet your needs and goals over a range of possible scenarios. While it is impossible to know with certainty how damaging inflation will be in your investment future, being prepared for the full range of possibilities, including a period of inflation during your retirement, can make sense.

For more and more people and not-for-profit boards, investing is about more than risk and return objectives. People and organizations want their investments to reflect their values and core beliefs. Socially responsible investing (SRI) is an increasingly popular investment strategy that integrates financial objectives with social and environmental objectives.

Here are some tips recommended by the CFA (Chartered Financial Analyst) Institute if you’d like to consider incorporating SRI into your investment plan.

Define Your Goals and Objectives

SRI is a broad and growing field that means different things to different investors. The first step in developing a socially responsible investment program is to ask yourself what you hope to achieve.

The answer should be based on your values and what you consider to be important. Your personal goals can determine how you implement a socially responsible investment policy.

Decide on an Approach

Socially responsible investment techniques can be categorized into three general approaches. You can certainly use a combination of all three.

The first approach, which is popular among mutual funds, is portfolio screening, which can take two forms.

(a) Negative screening excludes some companies or sectors from the possible investment universe based on certain criteria relating to the company’s policies, actions, products, or services (such as eliminating companies that manufacture tobacco products).

(b) Positive screening specifically includes some companies or sectors in the investment universe based on the company’s meeting certain standards (such as seeking out companies with strong diversity programs).

A second approach, called best practices classification, chooses companies in a particular sector that rank high based on one or more environmental, social, governance, or ethical criteria as well as financial criteria.

A third approach is using shareholder status as an owner in the company to monitor management, initiate constructive dialogue about its business practices, and influence managerial behavior through proxy voting or direct engagement. Although this active approach may not be feasible for the typical investor, investors can choose investment managers, pension funds, and mutual funds that define their investment strategies by such advocacy efforts.

Select an Appropriate Benchmark

As with any investment, you should choose a benchmark against which to evaluate your investment’s performance. Generally speaking, a benchmark is an index or portfolio that defines how a typical or average portfolio of similar securities might have performed, thus allowing the investor to judge portfolio performance.

Choose an SRI Rating Firm

A number of firms rate companies based on their social, environmental, and/or governance track record. Some rating methods focus on specific countries or regions and others are more global. Rating firms also vary according to what criteria are used to rank companies. In any case, firms that supply SRI ratings can do much of the work for you and can be a useful tool in implementing an SRI strategy.

Investigate SRI Vehicles

One way to invest in a socially conscious manner is to pick individual securities issued by companies that rank well according to your criteria (or those of a rating agency) and are also likely to perform well against a benchmark. Keep your expectations and criteria realistic.

Alternatively, several mutual fund families specialize in offering mutual funds with a socially aware approach. Investors can also choose from almost a dozen exchange-traded funds (ETFs) with an SRI focus.

Some SRI ETFs can be highly specialized, focusing, for example, on companies investing in alternative energy technologies or even more specifically nuclear power. These ETFs can be useful tools for constructing a socially responsible portfolio, but beware that these funds may be highly concentrated in one area and may not offer appropriate diversification.

Diversify

The golden rule of investing is to maintain a well-diversified portfolio because diversification reduces risk without necessarily sacrificing return. This imperative applies to SRI as well.

A process of systematically excluding investments and even market sectors based on negative screens or focusing exclusively on certain sectors can inadvertently create an under diversified portfolio.

Be Aware of Fees

Expect to pay higher management fees for socially responsible mutual funds and ETFs. Annual expense ratios for SRI ETFs range from about 0.40 percent to 1.00 percent of portfolio value.

These costs are substantially higher than for ETFs that track traditional broad market indices, like the S&P 500 Index, which have expense ratios that range from 0.08 percent to 0.40 percent.