Experienced investors may have understood this with the first investments that went wrong, beginner investors must know immediately: there are wrong investment habits easy to acquire and which must be paid attention. Let’s see what they are and how to try to remedy them.
Error 1 when investing: don’t plan
Having a plan always helps: whether it’s a trip or buying a house, a plan will help you avoid confusion much more easily.
Planning investments means that you need to know what you want to invest in and why you are investing, how much money you have available, what types of investments you want to bet on and your own risk profile. Without an investments planning, the first fluctuating market signal is likely to scare novice investors.
Error 2 when investing: sell because of fear
Panic selling is one of the worst things in the investment world. When you start considering the sale, it’s probably already too late: by selling something for less than the amount you bought it, you only capitalize on the loss. The ideal would be to wait, do research, talk to experts and wait for the market to recover.
Error 3 when investing: controlling investments compulsively
For many of us, checking for updates compulsively is a normal daily activity. Let’s think about social network: for some of us this impulse has practically become a spontaneous reflection, something really difficult to avoid.
When it comes to investment, however, it is really essential not to give in to this compulsive behavior. It is in fact rather difficult that the fate of bonds or shares is decided in a day, so checking daily is of little use. On the contrary, long-term performance should be considered. Also, monitoring stocks daily exposes you to the risk of panicking when you notice a slight downward trend.
Error 4 when investing: don’t be patient
Everyone is chasing the next market hit that will solve all their problems. Unfortunately, however, this rarely happens. The most important quality to invest successfully is patience.
Even the most famous investor in the world, Warren Buffett, claims that the best thing is to buy something with an intrinsic value and wait for its value to increase, and means decades, not months.
Often investing is nothing more than patience and waiting.
Error 5 when investing: being uninformed
Just like having a plan, doing the necessary research is a critical step in investing accurately. Making an “instinctive” investment can lead to buying shares or investing in companies about which you are not particularly experienced, so if a critical moment arrives you will not have the tools to store and protect your money.
Listening to experts can be a great way to get started, but nothing replaces research and personal education, which includes reading books and staying up to date on financial news.