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Investment Mistakes HNIs Must Avoid to Earn High Returns

Warren Buffett once said, “The first rule of investment is don't lose [money]. And the second rule of investment is don't forget the first rule.”

This rule applies to everyone and can prove to be really dangerous for HNIs.

High-net-worth individuals are those who usually own at least $1 million in liquid financial assets. Given their asset valuation, HNI investors are also the ones who are highly likely to find unique avenues to invest their money. While many have specialized assistance when it comes to investment, mistakes are not uncommon.

Here are a few such mistakes that HNIs make and ways to avoid them.

1. Non-diversifying portfolio

When investing large sums of money, it is natural for investors to seek highly secure avenues. In seeking security, many HNIs end up choosing concentrated portfolios or sticking to ultra-traditional ways of investing.

Diversifying a portfolio holds more importance for HNIs than any other investors. Diversification secures the funds and offers a buffer against market ups and downs. It is crucial to distribute wealth not just across sectors and asset classes but also across geographies to prevent any losses resulting from domestic turmoil.

At ShiftAltCap, we offer widely diversified investment stacks that financial experts actively manage to stay ahead of market fluctuations and reduce risks and losses.

2. Investing heavily in developing countries

Developing countries are a harboring ground of opportunities and upcoming industries. They tend to show steep growth graphs and promise a high return on investments. Due to an opportunistic landscape, foreign investment is in high demand in developing economies.

However, it is essential to assess the market dependencies of the promised growth. Many sectors in developing countries are dependent on their international ties with developed economies.

Hence, any fluctuations in developed countries and the investments slide down at an alarming rate. To avoid such untimely losses and the constant risk of market downturns, HNIs must invest a large chunk of their wealth in developed economies.

While it is okay to pour in some investment in developing economies to test the grounds, investing huge sums is a risk like no other.

If you need more proof for investing in developed economies, then check out ShiftAltCap’s two highly exponential investments stacks in US markets that earn up to 30% YoY returns with extremely low risk.

3. Investing without an exit strategy