Whether you’re juggling your own investments or teaming up with a financial adviser, it’s easy to slip into a few tricky mistakes that can quietly throw off your progress. To help you stay on track in the second half of 2025, Gabriela Bennie, Associate Investment Director at Rathbones shares the three key investment traps you’ll want to watch out for.
1. Don’t Panic When Markets Drop
It’s completely natural to feel anxious when the value of your investments falls. But acting on fear, especially by selling during a downturn, can lock in losses that might have been temporary. Panic selling during market downturns can lead to missing out on subsequent recoveries, when financial markets bounce back after a period of decline, which can have a serious impact on long-term returns.
Instead, focus on the big picture. If you’ve built your investment strategy around your long-term goals, such as retirement, family planning, or property, then short-term dips shouldn’t change your overall plan. Having a well-defined investment strategy can help you stay calm and avoid making emotional decisions when markets get bumpy.
2. Don’t Focus Only on the Short Term
It can be easy to get caught up in day-to-day headlines or worry about what the markets are doing this week or next. But reacting to short-term changes may result in buying high and selling low – the exact opposite of what you’re trying to achieve.
Instead, consider a steady approach. Regular investing—often called ‘pound-cost averaging’, means putting in a consistent amount over time, no matter what the market is doing. This takes the pressure off trying to ‘time’ your entry perfectly. Long-term investors who stay invested may see benefits from compounding returns, where the money you earn (like interest) starts to earn even more money over time.
3. Don’t Put All Your Eggs in One Basket
Investing in just one company, one sector, or one market can feel tempting, especially if it’s been performing well. But if that area struggles, your whole portfolio may take a hit. That’s why financial experts typically stress the importance of diversification, spreading your money across different types of investments, geographies and sectors.
Diversification helps balance out the ups and downs. Even if one investment isn’t doing well, others might be performing better, hopefully protecting your portfolio overall. By reviewing your investments regularly (what advisors call ‘rebalancing’), by yourself or with the help of an investment manager and financial advisor, you can aim to make sure you’re not too heavily invested in one area by accident.
Responding to What Comes Next
No one can predict exactly what the markets will do, but you can control how you respond. By staying calm, thinking long-term, and diversifying your portfolio, you may give yourself the best chance of achieving your financial goals. And remember, you don’t have to go it alone. A good adviser could help you stay on track, especially when markets feel uncertain.
Remember with investing your capital is at risk and you could lose some or all of your investment.
Get in touch with Gabriela on 0161 832 6868 or email gabriela.gyurova@rathbones.com to explore how we can support your financial goals.
