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Rookie investor mistakes

 

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DO you have an investment? How is your investment so far? Are you at loss or have you reaped your profits?

Investing is the best way to grow your money. That is why many are getting interested in investments because of the promise that their money will work for them.

However, there are a lot of hor­ror stories that their money did not reap any profits. Worse, their capital just disappeared. They were at a loss for words about their in­vestment loss.

The truth is while investing prom­ises profits, it also does not cancel the fact that it has so many risks. You can earn or lose anytime. That is why you need to be wise in your investment decisions as you are still new to the investment world.

Here are the mistakes a rookie investor often makes that also make them broke:

  1. Not educating yourself

What investment vehicle do you want to get into? Stock market? Real estate? Traditional business?

You need to learn the ins and outs of your chosen investment be­cause you are putting your money and your trust in that vehicle. You must know how to earn from those things. You must know how you can lose. Know thy enemy, as they say.

In the stock market, it is not true that you simply invest in a company, leave the money there for some years, be patient, and your money will just grow. You must know when to enter the market and when to exit. You must know when to stop the loss if the company you invested in had a crisis.

In essence, do not invest some­thing that you do not fully under­stand. Educate yourself first so you can save yourself thousands of your hard-earned money.

  1. Not having a safety net.

Investing can be risky, but you must risk intelligently. You must know if the investment reward is worth risking for. And because investments are full of uncertain­ties, I suggest that you have a safety net.

Do not go all in. Do not invest your wedding fund because you are hoping that your money will grow by the time of your wedding. Do not invest your emergency or retirement fund. This is not playing safe, you are just securing yourself and saving yourself from the worse loss – that loss of your future.

To become an intelligent investor, start first in building your emergency fund. Then build your investment fund – the money that is okay to be gone if all else fails.

  1. Not having a plan.

Remember when investing in cryptocurrency blew up? Many people invested their money because of the hype. They heard that many have doubled, even tripled their money in a short period of time. Unfortunately, many also have lost their invest­ments, even their savings, be­cause they followed the crowd and did not know when to go out of the market.

It is a big mistake not to have your own investment plan or strategy and just follow what most people or the crowd are currently investing in. While there are self-professed experts in the market, it is best that you just learn from them and their experiences, and not mindlessly copy their strategies.

It is simply because each per­son has different ways of think­ing and doing. Sometimes, the expert’s strategies work for him but do not work for you. So, you must know yourself and create your own investment strategy that works for you. Create your own path and thrive in it.

Investment promises a lot of good things – profits, passive income, and riches. However, investing is a process and most of the time, a hard one and requires a lot of studying, dis­ciplining, and practicing.

In my years in the finance world, I learned that investing is not just about the capital and profits. Investing is really about defeating yourself – from choosing delayed gratification over instant pleasures, from being too impulsive, and from listening and blindly following the crowd.

Great investors know them­selves. They know the invest­ment vehicle they are comfort­able to be in. They know what strategies work for them. While you are new in investing, know yourself first and the profits will follow.

THINK. REFLECT. APPLY.

Where are you currently in­vesting in? Have you experi­enced your first loss? How did you approach that first loss? What have you learned from it?

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