Investing is one of the most effective ways to build wealth long-term. Over time, it’s possible to beat inflation and see solid returns. However, not every investment strategy is a good one. If you’re not careful about what you’re doing, you can wipe out your capital instead of growing it.
Both beginner and seasoned investors are vulnerable to making these four deadly investment mistakes. However, don’t be discouraged if you’ve already made some of them. Recognizing these mistakes is the best way to avoid them and design a smarter investment strategy.
4 of the Biggest Investment Mistakes
A good investor is not someone that always makes the right call. It’s an individual who knows that investing requires taking risks, including some that may not pay off.
The good news is that you don’t have to make these mistakes yourself. Learn from others before you, and keep an eye out for these pitfalls:
1. Waiting too long to start investing
The first investing mistake you can make is not investing early enough. Invest too late, and you’re losing the best money-maker of all…time itself. Your investment makes money through compound interest. This means that you’re getting richer by just letting time pass by, and it’s critical to take advantage of that.
Some of the most common reasons for waiting to invest is the belief that you do not have enough money, or not knowing how to invest. But the truth is, there’s no excuse not to begin.
There are companies and apps that will facilitate investments even with a small amount of money. Not sure what to invest in? Learn the ropes with a Robo-advisor or use an indexing strategy.
2. Not investing enough when you can afford it
Once you start investing, build the habit of investing more. While it’s okay to start with a small amount, staying with a small amount is just not enough to build your dream retirement portfolio. The amount you invest should increase as your resources increase.
3. Paying too much in fees
Fees won’t make or break your investments, but they can significantly erode your returns. It’s simple— the more you spend on fees, the less money you end up with over time.
Therefore, look for brokerages that charge low fees. Explore low-cost funds such as exchange-traded funds, index funds, and ETDs that can have lower expense ratios. Paying attention to fees can help boost your returns long-term.
Source: VisualCapitalist
4. Basing your investment strategy on emotion
One of the most expensive investing mistakes you can make is to buy and sell based on your emotions. It’s easy to get caught up in the hype of a new investment and forget to complete your due diligence.
The flip side is letting emotions cloud your selling decisions. For instance, you panic because the market is down and you sell. This only serves to lock in losses.
Buying and selling your investments requires careful thought. Make decisions based on planning and logic, not emotion, or you risk losing out.
History shows that when you invest and stay invested, there’s a bigger chance to earn positive returns over time. Don’t let excuses, emotions, fees, and other factors distract you from your financial goals. Stay on course by keeping these top investment mistakes in mind.
[Read Next: Smart Ways to Start Investing With a $100]
Tycoono Media Inc. and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. Please refer to our disclaimer for more information.
