Investing your money can potentially unlock further value from your hard-earned or inherited cash. In fact, those who become affluent often stay affluent not by keeping their money locked away in a bank, but by putting their money to work, living off the return, always looking for new healthy investment opportunities, and managing the possible risk that comes from such an approach.
That being said, investing is not necessarily good for the sake of it. It’s easier than ever to make a mistake, to make a false promise, to not protect yourself quite as you should, and to suffer the impact of that over time. After all, there are too many people all too happy to take your money out there, and figuring out a path forward as far as that is concerned can be tough. So, in this post we’ll discuss four mistakes to avoid while investing:
Chasing Past Performance
It’s the folly of any gambler – just bet one more time and all of your losses will be reversed. Of course, it’s easy to know this is a silly approach when we look at it objectively, but in the heat of the moment? That can be tougher. To avoid this, it’s important to ensure you limit emotional investing or use past metrics as a marker for what’s happening right now. This also means you can take every investment strategy that makes the most sense right now, as opposed to only considering a formula.
Overlooking Fees & Expenses
Investment platforms take fees. Currency conversion often invokes a fee. Subscriptions to certain platforms, specifically Bloomberg access or terminals, will accrue a fee. Trading will often curate micro-fees. Ignoring and failing to calculate this as part of your investment will prevent you from truly assessing your final position. Sure, you might not be put off an investment by a fee, but you may assume a position you aren’t actually in without this approach, and that’s never a good idea.
Not Setting Clear Investment Goals
Avoiding any appropriate plan leaves you vulnerable to emotion-based decision-making, and that’s never a good idea. However, investing with a plan sets clear parameters about investment potential, acceptable losses, and the willingness to double down during market shifts. For example, diversifying your portfolio, supporting a given business, or even relying on the stability of gold pricing, all of this can be achieved if you stick to your principles and don’t let yourself veer off a smart investment strategy.
Relying On Investment Entirely
You may have heard that wealthy people often live from investments, benefit from their diversified strategies, or move money around to keep it liquid, but the truth is that investment shouldn’t come at the cost of financial stability. Make sure you’re not praying for an investment to come through, but think of longer term strategies for the slow accruement of value over time. This is how appropriate investments like pension funds work.
With this advice, you’ll be certain to avoid mistakes while investing in the best possible sense.
