---
title: "How to avoid the tourist traps of investing"
description: "I have discovered that two of the greatest things in life are investing for your future and travelling to broaden your world. Both expand your horizons, but I’ve learnt the hard way, they come with similar traps and we can avoid these traps with some insights."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "PERSONAL FINANCE OP-ED"
author: "Siyabulela Nomoyi"
author_url: "https://www.dailymaverick.co.za/author/siyabulela-nomoyi/"
canonical_url: "https://www.dailymaverick.co.za/article/2024-12-10-how-to-avoid-the-tourist-traps-of-investing/"
published: "2024-12-10T18:22:21"
updated: "2024-12-10T18:22:24"
lang: "en-ZA"
word_count: 760
---

# How to avoid the tourist traps of investing

> I have discovered that two of the greatest things in life are investing for your future and travelling to broaden your world. Both expand your horizons, but I’ve learnt the hard way, they come with similar traps and we can avoid these traps with some insights.

By Siyabulela Nomoyi · Published 10 December 2024, 20:22 SAST · Updated 10 December 2024, 20:22 SAST

## Key points
- In a tale that intertwines rookie travel blunders with investment pitfalls, a couple learns that whether navigating the humid streets of Thailand or the treacherous waters of the stock market, savvy planning, diversification, and a keen eye for fees can mean the difference between a delightful adventure and a costly misadventure.
- Rookie travel errors mirror investment pitfalls: opting for convenience over savvy choices can lead to higher costs and missed opportunities.
- A well-diversified travel itinerary, much like a balanced investment portfolio, enhances overall experience and mitigates risks.
- Planning and strategy are crucial: just as a travel itinerary helps manage expectations, a solid investment plan aligns financial goals with risk tolerance.
- Curiosity in both travel and investing can lead to traps; informed decisions and long-term commitment are key to avoiding pitfalls and maximising returns.

## Content

Some years ago, when my wife and I were still dating, we took our first overseas trip together – to Thailand, the Land of Smile*s*. As excited and apprehensive first-time international travellers, we decided to use a travel agent for advice, travel arrangements, and bookings. We only cared about two things: the destination and our budget.

We soon realised we made a few classic “rookie” errors. We went with the first (well-known) travel agent we found, who did not make any effort to get us the best deals, give us the best advice or tell us that we could negotiate on fees. We paid more than we should have, for less than we wanted. As with investing, it pays to be savvy.

Here are some traps to avoid – in travel and investing:

#### **Impact of high fees**

Just as we could have done our own online bookings at a fraction of the cost, investors can opt for consumer-friendly online platforms to access cost-effective, transparent indexation investment products like index funds or exchange traded funds (ETFs) with lower fees. Actively managed investments work quite differently and can come with higher fees. Management fees, transaction fees, advisory fees, and expense ratios for funds can accumulate and put a dent in your investment returns.

#### **Diversity in experience**

On our arrival in Thailand in September, the less crowded season, our biggest shock was the heat and the humidity we faced after a long 14-hour trip. The next morning, we met an older couple who told us they were travelling all around Thailand. We were only there for Phuket and realised that travelling to other cities like Bangkok, Chiang Mai or Krabi could have offered us a more diverse experience. Phuket offered stunning beaches and island adventures, but didn’t have the exciting urban nightlife and markets of Bangkok, or the laid-back cultural experiences of Chiang Mai.

Similarly, a well-diversified investment portfolio balances high-risk, high-reward assets with more stable investments, providing a better overall investment experience.

#### **Hedging for the unexpected**

The biggest shock of our trip was a sudden downpour of the heaviest rainfall we’d ever experienced, all the way up to the knees. Luckily, we had a backup plan, and our shuttle driver had monsoon driving experience. Similarly, you have to be prepared for life’s storms by investing across various asset classes, markets, and sectors. This can protect you from market downturns, helping to balance out losses if one asset class underperforms.

#### **The importance of planning and strategy**

For two young lovebirds, freely exploring paradise sounded more appealing than having a formal plan and itinerary. It worked out for us, but not everyone is as lucky. Now we always write down an itinerary, to help align our interests and manage travel time, budget, the weather and individual activities. Travel insurance is also a must. Similarly in investment planning, considering your risk tolerance, investment horizon and financial goals ensures solid returns despite volatility over the long term.

#### **Value of curiosity in investing**

On a walk to a market in Phuket, we met the most annoying but convincing salesperson ever. We ended up wasting almost an hour in his shop, where he pushed me to buy his “world-class” fitted suits, regardless of the 40-degree heat. It took some manoeuvring to get out of that trap.

In the investment world, our curiosity drives us to explore market trends and new strategies, which is fine if we can make informed decisions and adapt to changing market conditions. Curiosity can, however, backfire if it leads to perilous market timing and greed. Staying invested long-term unlocks the power of compound interest.

#### **Behavioural economics and anticipated regret**

When planning a trip, beware of FOMO (fear of missing out). As rookie travellers, we were worried about missing out on famous attractions such as the James Bond Island. We also needed to strike a balance because my wife loves relaxation and I just want to go-go-go. We accepted that we can’t do it all and that’s okay.

Similarly, for investments, you need a strategy that is adapted to your goals and protects you from emotional, FOMO-driven decisions. Regularly investing a fixed amount over time helps you shut out the noise and avoid regret.

#### **Reframing the experience**

Just like travel traps and investment jargon, fee obscurity and murky frameworks can quickly confuse new investors. Just as we balance luxury and necessity on our travels, being selective about when and where to incur higher costs can maximise satisfaction and returns without breaking the bank. **DM**

*Siyabulela Nomoyi is a quantitative portfolio manager at Satrix.*