If you want to build serious wealth then you need to be investing your money. However, when it comes to investing, there are a lot of mistakes that investors make. In today’s blog post I’m going to talk about some of the most common mistakes investors make and how you can avoid them.
#1 Waiting to Invest
When it comes to investing, time is your biggest asset. Starting sooner rather than later gives you a better chance of greater returns. Not only do you have more time to contribute to your investments, you also have more time for your investments to grow over time and benefit from the magic of compounding. Not sure how or where to invest? Educate yourself, pick a sector, do your research and talk to an expert who is not trying to sell you anything. (Learn about compounding in this blog post here!).
#2 Investing with emotion
Watching every dip and climb the stock market makes - everyday. Investing because your boyfriend said so and you are so in love. Instances like this are recipies for disaster. Investing requires you to be objective and put emotions aside. You’ll need to ask yourself questions like - does this investment make sense? do I understand it? what is level of risk? what is the rate of return? How much time am I able to invest?. Put emotion aside and make your investment decisions with a clear head.
#3 Trying to time the market
Your focus should be on understanding your investments and creating a long term plan that aligns with your life & financial goals. Once you have a solid long term investment plan you can become more conservative as you approach the time when you'll need your money.
#4 Expecting overnight returns on your investments
There's no such thing and if anyone is trying to sell this to you, run! Investments require time to perform and grow in value. Rome was not built in a day - remember that.
#5 Not considering taxes in your long term plan
Understanding what your potential tax burden will be is critical to your plan and you'll need to make sure you factor in to your plan how much in taxes you will have to pay on your earnings. This way you can ensure you are achieving your financial goals from investing in addition to your tax burden.
Now you know what some of the biggest investment mistakes are, you can revise your strategy accordingly and set yourself up for even greater success with your money over the long term!
Bola Onada Sokunbi
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