If you have some money saved, investing it is the most sensible way to prepare yourself for retirement. If you can see some good returns on that investment, you’ll be in a far more stable financial position later in life.
But a lot of people get their investments wrong and end up losing money instead of making it. If that happens, you could find yourself in a very difficult position so it’s important that you learn how to invest sensibly.
The best place to avoid losing your money is to understand why investments go wrong in the first place so you can make sure that you avoid those mistakes.
These are the 3 biggest reasons that investments fail.
#1 You Don’t Take Advice
This is the biggest mistake that people make when they’re new to investing and it’s a big one. There is a lot of good advice in books or online about how to invest well and you should do your research first, but that isn’t usually enough to make sensible investment decisions.
The bottom line is, you need professional help if you want to make the most out of your money. If you visit the WealthPlan Advisor website you can find more information about finding an investment advisor that can help you.
If you speak with an advisor about your goals, they will tell you which investments are best for you and they’ll be able to help you make the best decisions and minimize your risks, which brings us onto our next point.
#2 Not Understanding The Risks
If somebody tells you that they know of an investment that is completely risk-free, they’re lying. Even though there are some low yield investments that are very safe, no investment is entirely risk-free.
It’s so important that you understand the risks involved with an investment before you decide whether it’s right for you or not. People often get blinded by the potential gains so they forget about the risks and start making reckless decisions with their money, and that’s when they lose out in a big way.
Always consider the worst case scenario and think about whether you’re in a financial position to deal with those losses.
#3 Letting Emotions Get In The Way
We never make sensible decisions when emotions are running high and that can be a big problem for investors. It’s important that you don’t let your emotions get the better of you when it comes to making decisions about your money.
A lot of people tend to get over excited when they’re seeing good returns and decide that the best thing to do is invest a load more money.
The problem is, that might be money that they can’t really afford to invest and because they feel like they’re doing so well and they can’t possibly lose, they make poor investment decisions.
Equally, when the value of your investment dips a little, it’s easy to panic and thinks that you need to get out now while you still can. But in reality, it might just be a small dip and you may still ok if you just bide your time and let things even out again.
If you’re making any of these mistakes, your investments are likely to fail and you could lose a lot of money.