7 Costly Mistakes Investors Make
Mistake number one: being too conservative
Being too safe will cost you in the long run. If his retirement funds are invested in conservative funds throughout his working life, he is defrauding himself and his future retirement. Financial experts have said this will leave him more than $100,000 short of what he could have had. It is important that your money is working as hard for you as you are working hard for your money.
Mistake number two: being too greedy
Some investors are at the other extreme and are too greedy to the point of being reckless. I am not referring to those who invest in their retirement fund, but to those who have all their savings invested in financial companies that attract investors with market interest rates. Greed sets in like it did when investors burned their fingers during the 2007-2008 global financial crisis with the collapse of several financial companies.
Mistake number three: lack of diversity
The main mistake made by many of those who lost money during the global financial crisis is their lack of diversity; that is, they put too many eggs in one basket and when one basket falls over, the result is a complete disaster as far as their finances are concerned.
Mistake number four: listening to the wrong advice
Associating with the wrong people will affect your finances because you will end up listening to their conversation, which will affect the way you think. It’s like non-smokers inhaling the fumes of their so-called friends who are addicted to the habit. If you stay with them long enough, your own health will suffer.
Mistake number five: not doing homework
You have to do your homework on whatever you are investing your money in and not just invest blindly. There is a lot of information online, so there is no excuse for ignorance in this area. The public library has many financial books, so there is no need to spend money on books.
Mistake Number Five: Getting Too Excited About Your Investing
You cannot be emotional with your investments. Use cold hard logic when evaluating your investments. Investing in mutual/managed funds takes your emotions out of investing, as the fund manager chooses the investments.
Mistake number six: Lack of patience
Depending on your strategy, some investments are long-term and require patience, but it all depends on your age and personal circumstances. Still, if you’re young, you have the advantage of time on your side, so patience will help you achieve your financial goals.
Mistake number seven: Lack of planning.
All successful ventures are well planned! So having some kind of strategy for your financial future is essential. You must decide what the purpose of this money is; Is it for your retirement, a new car, a down payment on a house, your education? You must be specific.
Read all you can about the various investment options and which ones suit your particular circumstances. Everyone has different goals, so your strategy should be one that suits your personal desires.