7 Ways to Avoid Common Investment Faux-Pas
First thing’s first - investing isn’t an exact science. Investing your hard-earned money will always involve a level of risk, and it can certainly feel a bit like a gamble. But it needn’t feel like you’re jumping into the abyss of financial unknowns. Look out for ways to avoid common investment mistakes to help boost your confidence and increase your chances of investment success - other people have made these common faux-pas so you wouldn’t have to.
Read and learn:
- Not having an end-goal or plan.
Your investment strategy should be determined by your end-goal. Are you looking to save for a deposit on a house, or your children’s university fees? Doing the maths and planning the long-term is vital. It makes perfect sense, really - would you top up your car with a full tank of fuel, only to pursue a road trip with no destination in mind?
- Investing too late in the game.
Don’t wait ‘til you’re at the comfy age of 50 to venture out into the world of investing - you’ll lose out on the magic power of compounding interest. It doesn’t matter how much you invest as long as you start early. One of the most pervading myths about investing is that you have to be on a six figure salary to start. Newslash - you don’t.
- Not paying attention to the investment terms.
Always. Read. the. Small. Print. Never simply assume and always do your research. You’d be surprised at how many unpleasant surprises may be lurking once you’ve scratched the surface. Wise up and pay attention to the t&c’s.
- Trying to outplay the market.
Just don’t. Jumping in and out of the market at what may feel like the ‘right’ time leads to worse results than keeping calm and carrying on. Remember - patience is a virtue, and time in the market beats timing the market.
- Overpaying fees.
Be aware that there’s a plethora of investment platforms that will charge ridiculous amounts for their services. Be a wise investor and shop around thoroughly before committing yourself.
- Forgetting to rebalance.
Rebalancing your investment portfolio is an important element of being a successful investor. Think of it like re-tuning your car - a rebalanced portfolio allows you to keep those investment risk levels in check, so don’t forget to set a periodic date for tending to those needs.
- Failing to see the long-term.
Paul Samuelson said that “investing should be like watching paint dry or watching grass grow. If you want excitement, go to Las Vegas.” If you’re after a quick-fix, adrenaline buzzing gratification, go to the casino. To be a successful investor, you must have patience and a long-term vision.
Credit image: Unsplash / Les Anderson.