On the surface, investing seems like an amazing opportunity for those who have already done the legwork. Because we’re all looking to make our money work better for us in this world, we can find ourselves clutching at straws as far as investments are concerned. So many of us are desperate to get an extra income because we think this will make us happier. But so many people are falling flat at the very first hurdle because of some of the common mistakes. What are some of these?
Unclear Goals
Many people believe the goal of investing is just about making money, but you need to think about it differently. Money is a tool to help you accomplish goals in life because many people think that they need to earn hundreds of thousands of dollars.
It’s far better to go back to basics and really understand what your life goals are. Because then you can find the right investment for your needs.
Chasing Trends Too Much
Many people look at something like cryptocurrency as being a “done deal,” because they are seeing more Bitcoin ATMs and more publicity. But we’ve got to remember that any investment is not about chasing the trends. Because there is a buzz about a certain stock, everybody jumps on it. Many people chase the stock or currency because they are worried about missing out, but this is where you need to conduct due diligence before you start investing money.
For many people, starting with a more hands-off approach like passive investing can give them a good lesson in avoiding the trends. Any stock, from cryptocurrency to the US dollar will go up and down. But so many people think that their stock should go up and up and up! This is not how it works.
Investing is always about the long game, and if you ever feel that you need to jump onto some form of “hot stock,” stop, breathe, and maybe think about putting the money into a retirement account. While you know your financial situation the best, you’ve always got to think twice before you start investing in something that seems like a sure thing.
Watching the Markets Way Too Much
It’s important to look at the markets, but many beginner investors can find themselves being swept by the whole excitement of investing. Many people feel they are poised to sell in case their stocks go down slightly. The markets will constantly move, which means that it can be difficult to follow them in real-time.
Investing is about the long haul for the most part, and if you are changing your investments on a regular basis or being too hasty in selling them, most of the time you’re better off leaving your investments where they are. Long-term investing shouldn’t be exciting. In fact, it needs to be boring and slow. Checking your investment is important, but it’s far better for you to do it semi-regularly, for example, every few months.
Investing Money You Need
Lots of people start investing because they think it’s a great way to get rich quickly. But one of the biggest issues is that you are investing in things that don’t give you a good return. If you invest the money you need into something and you’re putting your faith in something turning out positively, this is a recipe for disaster. If you ever have a financial emergency, you should not rely on investment because of the volatility of the stock market.
If you feel you’re ready to start investing, the best way to test your readiness is to see if you’ve got a good amount of cash saved to meet your short-term goals. Because if you need money you need to spend within the next few years, it’s not advisable to put them into stocks.
Delaying Investing
Many people think that investing is a waste of time apart from in something like a Roth IRA but the investment risks that come with stocks or shares and the fact it can seem somewhat baffling to newcomers can throw people off the scent. If you choose to not invest at all, this can be a very big mistake.
Because if you leave your money in the bank account it is losing some of its compound interest. Many people choose to leave money in a bank account because it’s in one place and they know where it is. If you invest in the long-term, you will experience many compound effects that can make a big difference.
There are of course certain kinds of accounts where you can gain a lot more interest, so it’s particularly worth being aware of these if you are keen on improving your financial standing as much as possible. A good example of that would be a 401k – while a retirement plan, it can be useful as a means of putting your money aside, and can be thought of as investing in that sense, or saving money you can then use for investing.
If you are going to do this, check out this voya financial information and help make sure that you make the right decision.
There are so many mistakes people make when it comes to investing. It’s a discipline that you need to learn, and if you do it right, you can go a long way.
