If you’re new to investing, the process can seem pretty daunting. With so many things to consider, it’s easy to make a mistake that could cost you big time. That’s why we’ve compiled a list of 7 investing mistakes you can’t afford to make suggested by AG Morgan Financial Advisors.
Investing without doing any research is a recipe for disaster. You need to know what you’re getting yourself into before putting any money down. Otherwise, you’re just gambling. Be sure to read up on the different types of investments, understand the risks involved, and know your own risk tolerance.
Don’t put all your money into one stock or one type of investment. Diversifying your portfolio across different asset classes and investment vehicles will help mitigate risk and give you a better chance of achieving your financial goals.
Investing can be an emotional roller coaster ride, but succumbing to emotions like fear of missing out (FOMO) can be disastrous. When making investment decisions, be sure to think things through rationally and refrain from following the herd mentality. Remember, it’s your money at stake, so don’t let anyone else control how you invest it.
Investing without a plan is like driving without GPS—sure, you might eventually get where you want to go, but unfortunately, it’ll likely take longer and cost you more in the process. A good investment plan takes into account your financial goals, risk tolerance, and time horizon. It also provides guidance on how much to save and invest on a regular basis. Without a plan, getting off track and making poor investment decisions is easy.
Chasing performance is often a losing proposition because past results do not guarantee future success. Instead of chasing short-term gains, focus on building a well-diversified portfolio that will help you achieve your long-term financial goals. And don’t forget that even investments that have performed poorly in the past can still have a place in a diversified portfolio if they help meet your goals.
When it comes to fees and expenses, every little bit counts—especially over the long term! Hidden fees can eat away at your investment returns, so be sure to watch out for them when choosing investments for your portfolio. Index mutual funds, there are also certain fees worth paying because they can offer valuable services or benefits, such as professional management or access to hard-to-find investments. Just be sure that the benefits outweigh the costs before making any decisions.
Making investment decisions based on emotion is almost always a bad idea—whether you’re driven by greed when prices are going up or by fear when they’re going down. When it comes to investing, it’s important to maintain an objective perspective and stick to your plan. Doing otherwise could lead to subpar performance and missed opportunities.
Investing can be challenging, but by avoiding these common mistakes, you’ll be well on your way to success. Just remember to do your research, have a well-diversified portfolio, think long term, focus on building wealth rather than chasing performance, avoid emotional decision-making, keep an eye out for fees, and most importantly—have a plan.