Have you ever put money into shares, stocks or any financial venture with the aim of achieving a profit? Well, that’s investing no matter how small it seemed. I’ll assume you are a first time or intermediate investor because either way, we need to have a little chat. Making investment decisions whether you are starting a small business, stock investing or any other type of investment you first need to know the basics and mistakes to avoid as an investor.
As opposed to common beliefs, you don’t have to be rich to start investing. The earlier you start investing the sooner you’ll become financially dependent and free. You can start investing now by clicking here and grabbing an investment idea. Before you decide to invest, you should be familiar with mistakes to avoid when you start investing.
Let’s jump right in!
1.Not Doing Research On Investment Opportunity; What is your investment all about?
This is a “famous” yet most straightforward mistake in investing. When that investment opportunity you’ve been waiting for crosses your path you go wild with joy and might forget to do research on it. When presented an investment opportunity, the first thing to do is perform an extensive research on the whole topic.
Know the basics, profits, and risks that revolve around the investment before you say yes. Is it worth the risk? After doing your research you can then accept and decide to invest.
2.Not Having An Investment Plan; Why and how are you investing?
You think this is too obvious right? Most people overlook having an investment plan and sticking to it.I don’t want to bore you with this obvious point but just stay a while longer.
When you are about to invest ask yourself, why am I investing? How are my finances? Check the ten questions to ask yourself before investing. As soon as you ask yourself those few questions, am sure you already have made an investment plan. The answers build the best investment plan with goals you can reach.
3.Not reviewing your finances; What is your net worth?
First and foremost what is net worth? Net worth is simply the total value of everything you own that can be resold, your account balance, investments minus your debts. Making this number ”bigger” should be your financial goal and it can be done by investing.
In spite of investing making your net worth number ”bigger,” it can make your finances suffer. Before you start investing it is important to calculate and review how the investment plan will affect your finances. After making a reasonable evaluation, start investing.
4.Going All In; Investing in one place?You looking for trouble?
I think you are familiar with the phrase “don’t put your eggs in one basket”. Well, same applies to investing decisions. It’s quite straightforward how big of a mistake it is to invest in one place. Loses can occur any moment. Let’s take a common example. Me. What happens when Google changes its algorithm completely, coming up with policies I do not comply? My income will plummet dramatically. That means if I was depending entirely on my blog for income, I am totally screwed. Sorry for the language but that’s how bad it will be.
Diversifying investments is advantageous because when one investment collapses, you can count on the others to have your back.
5.Investing in ”hot stocks”; Do you really know what you are getting into?
Michael’s savings had reached his desired limit to start investing. He had studied a number of undervalued companies and was interested in investing in this one called C.M.D Global. It was fairly new and quite the “hot stock”. Just around the time he wanted to start investing, the company was announced to be having “liquidity issues”. The company shares plunged to $3.50.He got really excited and decided to buy out of the money $4 call options. This means that if the stock rebounded above $4, he could profit from the transaction and if they remained below $4, he would lose everything. He put in all his money.Some weeks later C.M.D Global filed for bankruptcy.He lost all his hard-earned savings.
From that short story, you can see the huge dangers of investing in ”hot stocks”. No matter how great and tempting the deal is, just invest in something you have a long time idea about. The more you know, the less likely to make a mistake.
Everyone wants to get to the investment world and experience the gains. What you need to know is that the investment world also has its mishaps and the more you know the better.
Learn from written mistakes and make less of your own