No one is a perfect investor. Even the amazing Warren Buffet has made mistakes over time, surely. You will make your own too, but in an effort to help, allow us to share common mistakes to avoid.
Mistake #1: Not investing at all, or always putting off investing until later. There will always be something else to do with your money. You need to make investing a priority. Make your money work for you – even if all you can spare is $20 a week! Gail Vaz Oxlade makes this point well in her recent book Never Too Late: the earlier you start the better, so just start now!
Mistake #2: Having just told you not to put it off forever, investing before you are in the financial position to do so is another big mistake. Get your financial situation in order first: pay off high interest loans and credit cards, and create an emergency fund (most experts suggest at least three months of living expenses in savings). Once this is done, you are ready to start investing for larger goals.
Mistake #3: Don’t expect to get rich quick. Get rich quick schemes are among the riskiest styles of investing, and you will more than likely lose. Be sure to give yourself plenty of time to reach your financial goals, invest for the long term, and have the patience to allow your money to grow. If you want to gamble with high risk investments, make sure you are playing with money you can afford to lose.
Mistake #4: Don’t put all of your eggs into one basket. This really can’t be said enough. Diversify. Invest in various types of investments and industries for the best returns, and to protect your portfolio from volatility in one sector, or problems with one particular company.
Mistake #5: Don’t move your money around too much. The commission and transfer fees will eat away at any gains you make. Pick your investments carefully, invest your money, and allow it to grow – don’t panic if the stock drops a few dollars. Do your research and/or work with an adviser to determine the best time to sell to lock in your earnings or reduce possible losses.
Mistake #6: Hoping your investment in collectibles will really pay off. Honestly, if this were true, we’d all have a curio cabinet filled with china roses or Precious Moments. Collect because you want to. Don’t count on your Coke collection or your book collection to pay for your retirement years.
Have you made investing mistakes that taught you important lessons? Please share with our other readers.
