Does experience win over attitude when it comes to investing?

There is no clear-cut answer about whether experience or attitude is more important for investing success as it depends on your investment strategy, goals and approach to taking risks.

On the one hand, being an experienced investor can help you learn from past mistakes, develop your skills and gain confidence in your decisions over many years. On the other, being perhaps younger and newer to it means you have time on your side and could benefit in terms of your risk tolerance and income level.

Youth vs age – how they weigh up

If you’re a younger investor, you'll probably have more time to invest for the long term and benefit from the power of compound returns, but if you’re older, you may have access to more resources and opportunities. Experience – learning from past mistakes – can help investors cope with market volatility and uncertainty and avoid emotional biases that can affect their performance.

Younger investors might be more willing to take greater risks for higher returns as they have more time to recover from losses. Older investors may have more money to invest but less time to grow their wealth.

Older investors may be more conservative in their approach, looking for lower-risk, lower-return investments. This approach could be down to having more financial commitments when you’re older – like a mortgage and family to provide for – as well as thinking about your retirement. As you get closer to retirement, you may have less time in the market and so have less tolerance for volatility. Compare this to someone who's benefited from a JISA – they could have up to 18 years of investments while still a teenager, so potentially start adulthood with many more years to grow that sum.

Pitfalls to be aware of

Elements that can work against inexperienced investors include:

Procrastination

Investing should be approached as a long-term activity, with regular contributions to your pot if you can afford it. Any delays to regular contributions, or lack of regular reviews of your portfolio in line with your risk profile, could impact your journey in reaching your long-term financial goals. If you think 'I'll start in another 10 years when I have fewer overheads or earn more', you may find that your overheads are the same, if not more, and you've lost a decade of potential investment growth.

Speculation

We tend to take more risks when we’re young, and investing is no exception. Speculation is going out on a limb – buying an asset (let’s say stocks) that has a risk of losing value but which you hope will soon gain value.

Overconfidence

Past success could give you a feeling of overconfidence and lead you to overestimate your understanding of the markets or specific investments. It could result in a gung-ho approach to ‘timing the market’ or taking on a risky investment because you’ve mistaken past luck for skill, which could end up losing you money.

Dismissing advice or information

If you’re young and going it alone, it’s vital that you find out as much information about your investment strategy as possible or seek expert advice if you don’t have the time to spend on it. Overconfidence could lead an inexperienced investor to sidestep expert advice, which could cause problems.

Tips to help all types of investors

Both your experience and your age can impact your attitude to investing. The best approach depends on your situation, goals and personality. However, some general tips that can help you no matter your age and experience include:

Start investing as soon as possible

Invest regularly and consistently. This can help you take advantage of the power of compounding (Opens in new window) and reduce the impact of market fluctuations over the long term.

Do your homework before investing

Research the companies, industries and markets that interest you and understand the risks and potential rewards of each opportunity.

Have a clear investment plan and stick to it

Work out your investment goals, time frame, risk tolerance and where you’re going to invest. Review your plan regularly and adjust it if needed but avoid making impulsive or emotional changes based on short-term market movements.

Seek professional advice

Speak to someone who does this for a living. Financial planners, advisers or coaches can help you create and implement a suitable investment plan and guide and support you along the way.

Whenever you start your investment journey, remember it should be a long-term commitment, requiring your attention to make the most of your money.

Introducing Nutmeg

Introducing Nutmeg, the digital wealth manager that's part of the Chase family. You can now open an account with Nutmeg (Opens in new window) and keep an eye on your investments from the Chase app (Opens in new window) – so you can see everything in one place.

18+, UK residents.

Nutmeg is authorised and regulated by the FCA in relation to certain investment services and restricted advice only. Chase is a trading name of J.P. Morgan Europe Limited. Nutmeg and J.P. Morgan Europe Limited are J.P. Morgan companies. Products provided by Nutmeg are not guaranteed by Chase. Before applying, you should consider if a Nutmeg account and its features are suitable for you and your investment needs

Recommended reading

• 5 ways to boost your income
• ISAs can offer a smart way to invest
• When should you start investing?

Disclaimer: As with all investing, your capital is at risk. The value of your portfolio can go down as well as up, and you may get back less than you invest. The Hub is intended as a knowledge portal to provide information on a range of topics, including financial products. Articles may reference products and services that Chase UK does not currently offer. This article is for information only and does not constitute financial advice.