5 Behaviors Shackle Investment Strategy

Many investors have the potential to fulfill their financial destiny. But certain behaviors can slow or completely stymie their financial growth.

Here are a few behavioral issues to avoid if you want to stay on top of your investment strategy.

Inactivity can prove detrimental to your personal finances, and it could result from the fear of investors to take on risk or a fear of failure.

Evan Kessler, Certified Financial Planner and founder of ESK Capital Management LLC in New York, says one major problem with many clients is the tendency to take on too much risk or not enough.

"Many of my retired clients who were frightened by the large market drop of 2008 are now sitting with portfolios that contain too much cash and/or bonds," he says. He warns that the effects of inflation and taxes will prevent these investors from reaching their retirement goals.

"Although they are not taking equity market risk, they still risk running out of money," Kessler says.

Following the latest investing fad and ignoring your specific goals can take you off the right course to fulfill your investment strategy and lifestyle needs.

David Krueger, author of "The Secret Language of Money," says that herd mentality, defined as the altered state of mind induced by the emotion of group momentum, is what happens when an individual investor abandons an investment plan in order to follow others in his or her peer group. Krueger says the emotional contagion can be due to -- and prolong -- a market bubble such as the Internet tech bubble of the late 1990s. It can cause emotional reaction in the opposite direction, such as the market crashes of 1929 and 2008.

According to Krueger, people make mistakes because they don't have a plan or don't stick to it when emotions run high.

"When herd mentality prevails, the emotion of the right brain holds sway over the logical and reasoned left brain, even at times seizing and holding it hostage," Krueger says. "Greed, emotional contagion and peer pressure trump logic."

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