Higher Returns Do Not Always Mean Greater Wealth – What Mistakes Do Investors Make?

In the Verslo tribūna podcast by Verslo žinios, Dovydas Asanavičius shares his insights on investing and explains why, over the long term, investors should focus less on complex portfolio decisions and more on increasing their income, maintaining a solid savings rate, and staying disciplined.

When investing, people often focus primarily on their portfolios: which ETF to choose, how much to allocate to stocks and bonds, and when to buy or sell. However, particularly in the early stages of building wealth, the most important factors are not complex portfolio decisions but the basics—increasing income, maintaining a strong savings rate, and investing consistently, says Dovydas Asanavičius, Chief Investor Relations Officer at Finora Bank.

Examples show that someone who invests a larger amount each month may accumulate more wealth over time, even with lower returns, than someone who chases higher yields but invests less. An investor who allocates EUR 150 per month and earns an 8% return will have accumulated more capital after two decades than someone who invests EUR 100 per month but achieves a 10% annual return. The savings rate is therefore one of the most important factors.

It is also essential to keep an investment plan simple and easy to follow over the long term. Complex strategies, constant portfolio tinkering, and attempts to outperform the market often only increase the risk of straying from the plan, Asanavičius emphasises.

One of the most practical solutions is therefore to set up automatic transfers as soon as income is received, rather than waiting to see how much is left at the end of the month.

Another important consideration is your tolerance for portfolio fluctuations. Higher returns generally come with considerably greater risk, which is not suitable for every investor. Experts recommend reserving only a small portion of the portfolio for more speculative or exciting investments.

To learn more about building a simple investment system, the importance of the savings rate, and the most common mistakes investors make, listen to the Verslo tribūna interview with Dovydas Asanavičius, Chief Investor Relations Officer at Finora Bank.

Listen to the podcast here.