These three common mistakes could be setting your portfolio up to fail

Summer is supposed to be a time of calm in the markets, but this year there has been much trepidation, something that is influencing near-term asset allocation decisions being made within portfolios. It isn’t uncommon to allow human emotion into the investment decision-making process but it can come at the cost of not reaching one’s individual goals and objectives.

These pitfalls are why it’s important to lead with planning and then compare current asset allocations against your big-picture goals. During this process, we’ve looked at a lot of portfolios and have seen three common trends influenced by the current market environment.Investors have been shying away from fixed income with interest rates and bond yields being so low and fear of an impending correction when rates start to move higher.

Then there are those going to cash to try and time the market. This is a very dangerous thing to do especially if one misses out on market rallies. For example, a study by Putnam Investments showed that those investors who missed out on only the 10 best days in the S&P 500 over the 15-year period to 2017 ended up giving away half of their returns.Another problem with low interest rates is that it is incentivizing investors to go to places they normally don’t.

Canada’s main index is also top heavy, with the Top 10 stocks representing nearly 40 per cent of the TSX compared to 20 per cent in the U.S. and a 10 per cent in EAFE markets.

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