"Common Investing Mistakes - How to Avoid Them"

Investing can be a scary undertaking. Unfortunately, many people make the same mistakes when starting out. Without proper knowledge and awareness, it is easy to make basic mistakes that could jeopardize your entire portfolio. Take the time to brush up on how to make safe investments before diving in – it’s worth it! Here’s a list of some of the most typical mistakes.

1. Not Knowing Your Goals

The most important part of any successful investing strategy is knowing what you want to achieve. Are you trying to save for retirement or just want some extra cash? Knowing your goals will shape the type of investments you make. For instance, investing for retirement does not mean you should be taking high-risk investments. To make sure that you are making investments that align to your goals, decide on a timeline for success and figure out your expected rate of return. You don’t have to be a financial genius to make good investments – you just need to be smart about what you are doing.

2. Not Diversifying Your Portfolio

If you put all of your eggs in one basket, you could risk losing everything. Investing in a portfolio that has a mix of different asset classes (stocks, bonds, mutual funds, and real estate) ensures that you will be able to diversify your investments. This spreading of risk will help you get the best returns while also protecting your investments. Consider working with a reputable financial advisor or online investment platform to help build a portfolio that fits your risk tolerance and goals. For example, Betterment or Wealthfront are both great options for diversified, automated investing.

3. Letting Emotions Rule Investment Decisions

When the market is going up, we’re excited and can’t wait to invest. Similarly, when the market is going down, we want to sell off everything. This emotional behavior is usually dangerous and can lead to devastating losses. Remember, the stock market goes up and down – if you time investments right, you can protect your portfolio against market downturns and take advantage of upturns. And if you are really concerned about the market, consider looking into investments that have a more steady return, such as bonds or real estate.

4. Not Paying Attention to Fees

Fees are the hidden costs associated with investments. Whether they be brokerage fees or mutual fund fees, they can really add up over time. Make sure to analyze different investment vehicles to determine which ones offer the lowest fees. If you are working with a financial advisor, they should be aware of any hidden fees and be able to explain them to you. If they don’t, feel free to ask. Again, an automated online investment platform might be a good way to save on fees by not having to pay for a human advisor.

5. Not Researching Before Investing

The stock market can be a risky business and as such, it is important to do your homework before you make any decisions. Study the company behind the stock or the fund that you’re considering. Tally the risks, review past performance, check for debt, and look for other warning signs. Be sure to make educated decisions and not to jump into investments just because they seem to be popular. Taking the time to do the research now is much better than regretting the decision later.

Learn From Common Investing Mistakes

Investing can be a great way to build wealth, but it’s important to know what you’re getting into. Don’t let common investing mistakes get in the way of your financial success. With a few basics, you can set yourself up for success. And don’t forget – invest only what you can afford to lose.