The 3 Most Common Investment Mistakes
“I’ve been working for almost 10 years now, earning good money and investing very carefully too, Why am I not as rich as I am? Why am I in the middle class?”
At least 2 out of 5 clients ask me similar questions. Do you know the main reason for this?
I listed three common mistakes you may have made. Not just a list. I also gave you the best and easy-to-follow solution to get rid of this mistake. Read ahead.
Mistake 1: How often do you take investment decisions in place?
Assume you sleep soundly. Suddenly there was a big thud. How would you react in such a scenario? Be it a cat or a thief. Immediately you take the object that is near you and ready to hit the threatening subject, is not it?
Do you react the same way when choosing an investment plan? If so, chances are higher for you to perform poorly. Instant or spontaneous investment decisions do not help you to get rich the way you want. Studies have shown that even professional investors fail to perform well when they make hasty, emotional, spontaneous or abrupt decisions. That is also when buying a well structured product such as a mutual fund. How can you avoid making decisions on the spot?
Save a pattern while building your investment portfolio and stick to it. Be a screenwriter for your portfolio, specify patterns in buying or selling investment products. Do not make hasty or spontaneous decisions just because your ‘hunch’ says so. The 3 Most Common Investment Mistakes
Does this mean you are silent only during market fluctuations? No, not at all. Rebalance your investment portfolio on a regular basis.
Mistake 2: How long before you choose the investment option?
One of my friends recently had a tough time at work because of poor performance. She has been identified with mild diabetes in which she refrains from consuming whole-sugar candy. After a few months, it looks like he’s okay. I asked if diabetes made him physically weak before, he said no. She had thought too much about not eating candy. The thought process sucks his energy and is then reflected in his work. As he slows down the thinking process, he begins to perform well in his job.
Too much thinking is not good when making investment decisions as well. Do you know why? You lose a lot of energy and willpower in the process of thinking. You get tired at the end of it. With a little energy when ‘really’ making a decision, you end up taking the wrong one. How can one avoid thinking too much while making investment decisions?
Automating the thinking process will help a lot in making the right decision. Do not waste your energy by always thinking about saving options. Strategy a plan on what products you are interested in investing. The 3 Most Common Investment Mistakes
This can be done by analyzing the pros and cons of various products. Choose which depends on your risk tolerance. Schedule your thought process with gradual planning. Once you have a basic plan, start investing in it. For example, if you feel a certain mutual fund matches your needs, invest in it. You can start with a smaller amount. Do not wait until you analyze all the products. Slowly increase the investment of more money on other options you choose.
Mistake 3: How often do you take action?
Many investors like to think about investing. They love to read a lot about personal finances. They love to discuss with their friends about portfolio development. They showed great enthusiasm for analyzing different investment options.
Just, thinking, reading, discussing and analyzing investments will not change your investment returns. If you make a decision and act on whatever you have read, discuss, think, and analyze, the results will change. Take financial and investment decisions and run as and when necessary.