As someone in the prime age, chances are, you have considered saving up and putting your hard-earned money on something that will provide you a return in the future. So instead of just letting it sit in the bank, you invest it on something profitable, but how do we really know when we have made the right choice of investment? How do we know when we are making investment mistakes? Here are some that you may want to know:
Not doing enough research
The first and most common mistake that a newbie investor could make is to not do enough research especially on the type of investment that they are planning to invest on or have already invested on. Ideally, starting investors should read thoroughly first on the investment that they are planning to make to check if it is indeed profitable, because who would want to invest on something that could potentially cause losses, right?
Being overly eager and impatient
Being overly eager and impatient could cause you to make impulsive choices which are not ideal for investments since these should involve a lot of hard-thinking and calculated risks. Acting on impulse might land you an investment which you have not really researched on and could also potentially cause you losses. After making your first investment, it is also important to avoid being impatient and withdraw your investment prematurely. Remember, money takes a lot of time to grow, so be patient.
Not diversifying your portfolio
Ever remember the saying, "Do not put all your eggs in one basket"? This is what it means. For investors, not diversifying your portfolio is a mortal sin. Investing on only one type of investment could be problematic especially if you put all your savings on it. Think of it this way: if you put all your money on only one company, and that company gets bankrupt, then what happens to your money? Zero. Whereas, if you put all your money on multiple types of investment, then at least you get peace of mind because you know that you have a safeguard when one of your investments cause losses since those other investments that made gains could counter it.
"FOMO"
FOMO or Fear of Missing Out is when someone feels anxious on missing out on something and tends to make impulsive choices just to catch up. This is a no-no for investments since, as said earlier, investing involves a lot of calculated risks. Jumping on the bandwagon is not a good idea when it comes to investments. Thus, starting investors should still take the time to be critical and do enough research before investing.
Not taking enough calculated risks
Last but not the least, as much as we want to stay away from losses, we should remember that investment involves a lot of risk, and it is up to us how to manage it. Taking calculated risks is the key to gaining profit, and it is important to know your risk appetite before investing your hard-earned money.