Crowd-following is a dangerous investment strategy.
While it can be tempting to follow in the footsteps of others, getting caught up in the hype can be risky for your investment portfolio.
The truth – it is only when you use your own wits and research to make a decision that you are minimising your risk.
If you are currently caught up in a property hype, read to find out how you can minimise the risk to your portfolio.
What Exactly Is Crowd-Following?
Crowd-following is like crossing a road without a crossing.
If you dart out in front of traffic on your own, you feel very vulnerable…
But if you step out the same time as someone else, you feel safer.
You may think that your risk has changed, that you are less vulnerable by stepping out with someone else.
But the truth is…
Your level of risk has not changed.
This principle applies to investing. Just because investors are flocking to a “property hotspot” does not mean that it is safe for you to invest there.
You cannot assume that the research and due diligence is up to scratch if many investors are doing it.
Getting Caught Up In The Hype…
Property investing is seductive for beginner investors.
The fancy marketing campaigns, the immaculate properties, the promises of fast and strong returns… these combine to create an enticing picture of what your future could look like.
But while the dream is exciting, be wary! Many investors get caught up in fancy marketing and lost thousands to faux promises.
The Key To Success?
Your best chance of success is to do the opposite of what the crowds are doing…
Do your own research before flocking to a “hotspot”.
It will feel uncomfortable, but savvy investors know that investment success comes from going against the crowd.
As Warren Buffet says: “Be fearful when others are greedy and be greedy when others are fearful.”
Your Next Step
If you’re looking for independent investment advice, chat to the experts at Adpen.
Whether you are a beginner or a seasoned investor, we would love to help you plan your investment strategy.