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7 Costly Mistakes Made By Investors
Mistake Number One: Being Too Conservative
Being too safe will cost you in the long run. You are shortchanging yourself and your future retirement if your retirement funds are invested in conservative funds your entire working life. Financial experts have said that this would reduce more than $100,000 from what you could have. It is important that your money is working for you as hard as you work for your money.
Mistake Number Two: Being Too Greedy
Some investors are on the other extreme and greedy to the point of recklessness. I am not talking about those who invest their retirement funds, but those who have invested their entire savings in finance companies that woo investors with market interest rates. Greed happened when investors’ fingers were burned during the global financial crisis of 2007–2008 when many financial companies collapsed.
Mistake Number Three: Lack of Diversity
A major mistake made by many of those who lost money during the global financial crisis was their lack of diversification; ie, they tend to put too many eggs in one basket and when one basket collapses, the result is a complete mess as far as their finances are concerned.
Mistake number four: listening to the wrong advice
Associating with the wrong crowd will affect your finances as you will overhear their conversations which will affect your mindset. It is like non-smokers breathing in the smoke of their so-called friends who are addicted to the habit. Your own health will suffer if you hang around with them too long.
Mistake Number Five: Not Doing Your Homework
Whatever you are investing your money in, you have to do your homework and don’t invest blindly. There is a lot of information online so there is no excuse for ignorance in this area. There are lots of financial books at the public library, so you don’t need to spend money on books.
Mistake number five: getting too emotional about your investments
You cannot be emotional about your investments. Use cold logic when assessing your investments. Investing in mutual/managed funds takes your emotions out of the investment as it is the fund manager who 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 are young, you have the advantage of time, so patience will help you achieve your financial goals.
Mistake number seven: Lack of planning.
All successful enterprises are well planned! Therefore it is necessary to have some sort of strategy for your financial future. You need to decide what is the purpose of this money; Is it for your retirement, a new car, a house deposit, your education? You have to be specific.
Read as much as you can about different investment options and which ones best suit your particular circumstances. Everyone has different goals so your strategy should be one that best suits your personal desires.
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