Rookie Investment Mistakes to Avoid
When investing money for the first time, there are many rookie mistakes that you can make. Some of these could negatively impact your return, possibly even leading to loss. Below are a few of the biggest investment mistakes to avoid and what to do instead.
Putting all your eggs in one basket
It’s unwise to invest all your money in one place. No investment is 100% secure – even a savings account in a bank. By spreading out your money across multiple investment channels, you minimize any risk of loss and increase the chance of a return.
This is known as ‘diversifying your portfolio’. It can be very important with things like stocks and crypto – while it may seem tempting to put all your money into a single instrument that is booming such as Tesla or Bitcoin, you never know what will happen in the future. Spreading your funds across multiple stocks or cryptocurrencies is safer. An even better option is to invest using different channels – such as putting some money into stocks, some into savings accounts, some into property and some into crypto.
Investing in things your don’t understand
You should never invest in something you don’t understand. Once you start doing this, you’re pretty much gambling. It’s good to always have a basic knowledge of what it is you’re putting your money into.
Before investing in a stock, cryptocurrency or asset, make sure to do your research. If a company’s stock is on the rise and they seem like a good investment, research the company first to understand why this is the case. If a friend has told you to invest in gold, make sure to do your own homework first – is now really a good time to invest in gold, how should you invest and where are the best places to invest?
Having unclear investment goals
It’s good to know what you’re investing for. Is it a retirement fund? Is it money to buy your first home?
Without a clear investment goal, you could be tempted to take out your money early. Alternatively, you could end up hoarding wealth until you die (which is fine if you’re saving up an inheritance, but no-so-fine if you’d like to spend it yourself).
Having a clear goal can also help you to choose the best investment channels. There are specialist savings accounts out there for retirement funds and first-time buyers with benefits.
Neglecting professional support/advice
Every rookie investor can benefit from seeking out professional support or advice. It could mean paying a little extra, but you’ll financially benefit from it in the long run.
There are many wealth management companies out there that can help you find the best place to invest your money. Investment advisors can meanwhile help to educate you with different investment strategies (you can even take courses or workshops).
Not keeping an eye on your investment
Fail to keep an eye on your investments and you could be late to react if things go wrong. This could lead to unwanted losses.
There’s always a risk that a stock or cryptocurrency can fall in value – by checking in regularly, you can sell any plummeting instruments before they lose too much value.
Even when it comes to savings accounts, it’s worth checking in to see that your funds haven’t been stolen or that interest rates haven’t changed.