7 Costly Mistakes made by investors
Mistake number one: Being too conservative
Being too safe will cost you in the long run. If your retirement funds are invested in conservative funds throughout your working life then you are short-changing yourself and your future retirement. Financial experts have said this will leave you more than $100,000 short of what you could have had. It is important that your money is working as hard for you as you work hard for your money.
Mistake number two: Being too greedy
Some investors are at the other extreme and are too greedy to the point of being reckless. I am not talking about those who invest in their retirement fund but rather those who have their entire savings invested in finance companies which entice investors with market interest rates. Greed sets in as was the case when investors got their fingers burned during the Global Financial Crisis of 2007-2008 with the collapse of several finance companies.
Mistake number three: Lack of diversity
The one major mistake made by many of those who lost money during the Global Financial Crisis is their lack of diversity; that is, they put too many eggs in the one basket and when one basket is dropped, the result is a complete mess as far as their finances are concerned.
Mistake number four: listening to the wrong advice
Associating with the wrong crowd will affect your finances because you end up listening to their conversation which will affect your mindset. It is just like non smokers inhaling the fumes of their so-called friends who are addicted to the habit. If you hang around them long enough your own health will be affected.
Mistake number five: Not doing your homework
You have to do your homework on whatever you are investing your money in and not just invest blindly. There is a lot of information online so there is no excuse for ignorance in this area. The public library has plenty of financial books so you do not need to outlay money for books.
Mistake number five: Getting too emotional with your investments
You cannot be emotional with your investments. Use cold hard logic when assessing your investments. Investing in mutual/managed funds takes your emotions out of investing as it is the fund manager who chooses the investments.
Mistake number six: Lack of patience
Depending on your strategy, some investments are long-term and require patience, but it all depends on your age and personal circumstances. Still, if you are young you have the advantage of time on your side so patience will help you acquire your financial goals.
Mistake number seven: Lack of planning.
All successful ventures are well-planned! So having some kind of strategy for your financial future is essential. You need to decide what the purpose of this money is for; is it for your retirement, a new car, a house deposit, your education? You must be specific.
Read all you can about the various investment options and which ones suit your particular circumstances. Everyone has different goals so your strategy needs to be one which suits your personal desires.