A beginner investor who jumps into the investment world is likely to make mistakes compared with another who did thorough research before investing. Common beginner investor mistakes happen due to lack of due diligence before investing, impatience, exuberance, or even being optimistic on the wrong investments.
As a beginner investor, you need to be sure of where you are investing your money. If you are thinking stocks, you want to find out how long the business existed? How have they survived the economic meltdown? Is it a stable company? If it’s real estate, you have to decide if you will invest in rental properties, flipping, investment trusts, and so on.
You also need to be aware of the common beginner investor mistakes so that you can avoid falling into the same pit or, if it’s inevitable, look for a way to cushion the risks.
Common Beginner Investor Mistakes
Whether it’s in the stock market, real estate, or other forms, investment is not something you jump into without doing enough research. If you start investing without proper knowledge, you’ll end up losing a lot of money.
See other common investment mistakes beginners are fond of making:
1. Having unrealistic optimism
There are days when you’ll invest wrongly. It could be losing in the stock market or buying rental property in the wrong location. It’s going to be difficult accepting that your money went down the drain.
But what will be terrible is poking on an open wound rather than leaving it to heal. What does that mean? When the company’s stock keeps going down, and rather than selling it, you leave it hoping that it will rise again.
You’re only hurting yourself. It’s one of the investment mistakes beginners make. Know when to sell your stock else, it will be too late.
Another scenario is when you buy a property in a terrible environment due to insufficient research, and no one is renting. Rather than spending money renovating the house, trying to make it look appealing, sell it. Hoping too long can deter progress.
2. Making financial decisions based on emotions
You don’t invest in a company because you work for the CEO or have a crush on him or her. Or you want to get a rental property in Queens, New York, because you grew up there.
It takes money to invest, not emotions. So maybe you should focus on what you are trying to get with your money.
Is the company worth it? What’s the financial statement of the company? How have they been previously performing? How often do they declare dividends? These are questions you should find answers to before investing, not because the staff is always dressing on point.
3. Having an unstable mind
You have done your research and chosen the best companies to invest in. Why are you trying to withdraw because you heard a particular stock is doing better last week?
If you are going to enjoy the investment game, you should have the long-term mindset. And this does not mean hoping on the wrong investment but staying with the one that has shown stability and exponential growth.
Remember that the end goal is to make better gains than what your savings account provides.
4. Holding on to the past
So what if you didn’t invest in bitcoin when it was still $0.0008? Or if you passed up the opportunity to invest in Google. You can’t keep crying over spilled milk. It’s in the past; let it go.
Take your mind off it so you can see new and promising investments that are springing up every day.
Conclusion
Now that you know the common beginner investor mistakes, you can do better with your financial decision making. Even if it’s stressful, always do your due diligence before investing in any market. You’ll be glad you did.
How good are your finances? Read the serious financial mistakes people make to see if you are making the same mistakes. You can also check our money management tips to improve your finances.
Do you know you can also invest in your life? Find out more on the benefits of having a life insurance policy.