The idea of making your money work for you, and accumulating wealth for a minimal amount of work is obviously appealing. However, if you’re planning to get started in investing, there are a wide range of mistakes that you may be liable to make. Just one simple slip-up can scare people off of investing for good, and end their wealth-building journey before it’s even begun. Here are some of the most common newbie mistakes you need to be aware of.
Thinking It's the Same as Gambling
One of the worst mistakes you can make is thinking about investing in the same way you do gambling or speculation. If you’re acting on a supposedly hot tip, or picking out a stock without doing any research, you’re not investing. Every single penny you put towards the stock market, forex, or whatever else, needs to be a decision you’re 100% comfortable with, and prepared to stick to for a long time.
Failing to Research
Continuing on from our last point, research and preparation is absolutely key to successful investing. By carrying out enough research, you’ll ensure that you have a thorough enough understanding of the product or instrument you’re buying into, and the likelihood of success and failure. This applies not only to the assets themselves, but also the platforms you’ll be using for trading. Sites like https://www.giocareinborsa.com let you compare different investing platforms, and choose the one that’s best for you.
Not Thinking About a Time Horizon
Going in without a time horizon in mind is another major blunder which can drive your ambitions into the ground. If you’re looking to accumulate wealth to buy a home or some other expensive piece of property, then you should plan your investments for a medium timeframe. On the other hand, if you’re investing for your child’s further education, this requires more long-term planning.
Failing to Think About your Tolerance for Risk
It’s integral not to overlook your tolerance for risk, or your capacity to take it on. This is going to have a major effect on the amount of money you start off pumping into the market. For example, if you can’t risk losing too much on the stock market, you’re much better off starting out with blue chip stocks, rather than the volatile ones of a new start-up. Before you make any big decisions, be brutally honest with yourself, and decide how much money you can afford to lose.
Failing to Diversify
That old saying “don’t put all of your eggs in one basket” applies to investing more than it does anything else in life. You can read a great guide to the importance of diversification at http://www.investopedia.com. The long and short of it is this: having your money invested in multiple different vessels offers you some protection, as if one of them loses value, you’ll still have capital that has the potential to grow. Nothing is set in stone when you’re investing, and you need to have a shield against sudden, erratic price movements.
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