investment-mistakes

Rookie Investment Mistakes to Avoid

Posted on Posted in Finance

Probably the best use for money is to save it. Investing in solid vehicles helps money grow which, in turn, provides a boost to the net worth of the person saving the funds. Besides living comfortably in retirement, the money can be used to cover a variety of unexpected life expenses if they so arise. People are best served putting money away for retirement as early in life as possible. Probably the biggest mistake people make is they wait until they are closing in on their retirement. Still, “better late than never” is an apt saying that applies to investing.

Rookies are going to make mistakes no matter when they decide to put money into the market. Some of these mistakes are survivable and others can bring devastation. All mistakes, great and small, should be kept to a minimum. The following are a few of the top rookie mistakes people are prone to make:

 

Relying Solely on the Stock Market

The stock market is an awesome vehicle for putting money into. No one would say buying blue chip or other safe stocks is a bad plan. The error so many make is they put all of their funds into the stock market. Such a lack of diversity means nothing exists to hedge losses if the market takes a tumble. Putting a reasonable portion of funds into the market is wise. So is putting money into bonds, bond funds, precious metals, and more. Diversity is always a good move.

 

Being Too Conservative

Conservative investments such as savings bonds and certificates of deposit keep people from losing their initial investment capital. Unfortunately, very small amounts of annual growth mean net worth does not increase immensely. Again, diversity is the key to success. A solid amount should be in conservative vehicles, but not all of one’s funds.

 

Avoid Trading

Without a doubt, the easiest way to lose a massive amount of money is to get involved with high-risk trading. Forex, options, and other commonly traded vehicles have made many wealthy, but a much larger group of people have lost their proverbial shirts trying to navigate the volatile world of trading. Trading is not investing. Trading entails making – or losing – money quickly. Newbies have a tendency to lose.

 

Don’t Get Caught Up In Fads And Ads

Faddish investment vehicles come and go. Advertisement promoting particular money making strategies emerge all the time. Smart investors would be best served trying to avoid getting involved with deals of this nature. Gold and precious metals are good investments to hedge a portfolio when markets and currency are weak. The price per ounce of precious metals do not do as tremendously well as novices thinks. They are led to think a certain way because of the bombardment of advertisements from gold sellers. Beware of falling into the trap of getting cause up with such things. Doing so is a great way to lose money.

 

Listening To Salespersons

There are brokers who make really great claims. Beware of those who make things sound too good to be true. Some may only be interested in a commission. Always research the seller and the investment vehicle before parting with money.

Investing is not all that difficult to engage in, but it is not entirely easy either. Newbies and rookies should keep ever on the alert about mistakes to avoid. This way, no money ends up being unnecessarily lost.

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