4 Mistakes That Way Too Many New Investors Still Make

Saving is great! In fact, literally, everyone should be doing it. It’s one of the safest and most risk-free ways in which to grow your money, and when you have the right savings account, you can grow your money faster than you might think.

However, even the best savings account will only give you marginal growth if you don’t pay into it regularly or don’t have much to pay in every month. In an era where we’re working harder than ever, yet never seem to have enough, we often have very little to set aside in savings, which is why so many turns to investments to grow their wealth.

Investments can be extremely lucrative. But it’s vital to remember that they always carry an element of risk. What’s more, nascent investors can find themselves falling afoul of mistakes which either impede the return on their investment or even result in outright losses.

If you’re new to the world of investing, steer clear of these commonly made mistakes…

 

#1 Investing in things that they don’t understand

New investors can feel like kids in a candy store. There are so many interesting and tempting sounding investments that it’s easy to get bamboozled, or worse- misled.

No matter how appealing an investment looks, investments commonly fail when the investor doesn’t understand what they’re getting into.

Never invest in anything that you don’t understand. Fortunately, you live in the digital age and all the resources you need to make better-informed investments are just a tap of your phone screen or a click of a mouse away.

Don’t be afraid to take your time doing your homework. Investments that are good now will likely still be good this time next week.

 

#2 Not knowing the liquidity of their investment

Often the most profitable investments are the ones that afford you the least liquidity- meaning that you can expect to be without your cash for a while your investment matures. Take the Fundrise review as an example.

Since it allows you to invest relatively low amounts in real estate (a table which only wealthy accredited investors usually get a seat at) it’s a great opportunity for investors who don’t necessarily have hundreds of thousands spare for an investment property. However, it’s important to remember that this is a long-term and illiquid investment.

You may wish to offset these with smaller, shorter-term investments if you need liquidity in the event of unforeseen expenses.

 

#3 Investing based on a “Hot Tip”

Here’s the problem with “Hot Tips”… By the time nascent investors find out about them… They’re probably not so hot anymore.

You can expect to pay more for shares with a prospect of much lower returns than those who were in on the ground floor.

 

#4 Going it alone

Finally, going it alone in the world of investment is rarely advisable. It can be a confusing and intimidating place for newcomers.

And while there are some genuine parties interested in helping you to grow your wealth who will happily render advice, there are at least as many sharks who are trying to make money from your naivete. And it’s hard to know which is which. This is why a reliable investment broker is an extremely beneficial contact to have.

While they can never guarantee success they can help you to avoid the common wrong turns taken by new investors.

Have you made any of these mistakes as an investor?