MISTAKES YOU COULD BE MAKING WHILE INVESTING
Investments can be incredibly tricky if you haven’t been a long-time investor already, but that is absolutely okay since you are never alone. With that being said, reconsidering investments and consistently being aware of your mistakes along the way can save you from a lot of trouble. Although it would pay to learn from the worst, it could also cause a possible pause to your investments in the future with the possible fear of risk emerging within you. (Read more about how to get rid of your fear of investment here).Here are some of the common investment mistakes that might have slipped off your mind. If any of these mistakes sound common to you, it might be time to reconsider and re-evaluate your investment decisions.
The unclarity of investment goals. Investment goals are incredibly necessary. Your goals are the guidance maps in order to help you with what you want to achieve with these investments. If you don’t have a goal in mind, or if you’re just stuck at a stage where you only have a visualized goal, start with laying out a step by step plan with what it is that you want to achieve. Everything related to business, investments, and money going in and out of your account, are extremely personal aspects that are based on your own experiences.Buying high and selling lowBuying low and selling high is the central principle that revolves around investing. The intention, however, shouldn’t be to sell as soon as the market value of the property goes up again. Understanding the highest value that your property can attain, takes a long time and would require you to hold a property for a longer time in order to make observations about the market in such a sense. You might end up having the thought of regret with the property that you sold when you could have got a much better value for it later on during the years.
People usually have the mindset of maximizing returns on a short-term level and would immediately buy high because that would benefit them the most at that given point of time.
Not reviewing investments regularlyLeaving investments unreviewed for a long time can take a toll on your portfolio in terms of balance. One asset class or one type of investment could be piling up within your portfolio and it could increase the risk concentration, meaning that if that one asset loses value, you would be losing a lot of money. You would rather have your investments reviewed and analyzed based on your investment goals so that you can re-strategize your plan and redirect towards the ultimate goal that you had envisioned.Being unaware of your property’s performanceIt is rather astonishing that over a period of time, people tend to have no idea about how their investments are performing. They usually just understand what is going on within the surface of the investment, but never in relation to their goals or portfolios. Keeping the contextual background of your portfolio in your thoughts is important because you might not understand if the return or the value of that investment is good or not through the vision of the financial goals that you might have set for yourself. Not diversifying enough
We keep mentioning diversification several times, over and over again. Come to think of it it is heavily connected to most of the points that have been mentioned so far. Diversification and risk concentration are the keywords that you may need to keep in mind with regards to your investment portfolio. Not diversifying enough might make you concentrate your risk into one single investment, and in the long term, this will make you lose more than you gain. Your gains and loses are all linked to your optimum investment plan and the diversification will strongly determine whether your plans are being accomplished or not — even how far they have been accomplished.If you have made any of these mistakes, they can be easily recognized and rectified in terms of the future. However, if you are a new investor, it is necessary to keep such things in mind before stepping onto the investment ladder.
“Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little.”
~ Fred Schwed Jr.
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