Common Investment Mistakes To Avoid
Managing your money and investments can be a worrying and arduous ordeal with a lot of associated stress. After all, you have a lot riding on getting it right and a lot to lose if you get it wrong. While nobody can tell you what the right decisions are or make the perfect investment for you, there are some common pitfalls that you would do well to avoid. Below is a list of some of the common investment mistakes to be aware of to avoid falling foul of them when investing your hard-earned money
Not understanding the investment
Whether making a UK property investment or buying into an up-and-coming tech company if you don’t understand the investment you have set yourself up for a fall before you have even begun. If you do not understand a business model or inner workings of the investment you should either spend the time doing your due diligence to bring you up to speed or steer clear of the investment altogether.
Investing with emotions
It is not uncommon for individuals to make investments based on emotional connections or personal preference. It is important to remember that just because you want something to do well or it holds a special place in your heart, does not mean that it will. Take property investment, for example, you may opt to purchase a buy-to-let investment because you just love the home or it is in an area significant to you. In turn, you lose sight of the aim of your investment. To make money. Your decisions should, at all times, be guided by business acumen and with your aims and long-term goals in mind.
Not diversifying your investment
Failure to diversify your investments is a kiss of death when it comes to risk management. The only way you can create an investment portfolio that manages risk and exposure is to diversify your portfolio. While it can be tempting to plough all of your money into one investment with the hopes of a big return, putting all of your eggs in one basket could see all of your money tanks and leave you with very little.
Overpaying in fees and commissions
When it comes to investments there are usually associated fees. This could be professional service fees for advice, commissions, buying or selling fees, or any number of associated costs. While many may be unavoidable it is important to remember that these fees come out of your bottom line, and even the small ones can add up to big numbers. Before undergoing any transaction or investment be sure you have fully researched all of the associated fees, that you understand why you are paying and ensure that they are competitive rates.
Making rash decisions
If an investment opportunity comes up and it seems too good to be true, well it probably is. Any investment you undertake should be done so with careful consideration and due diligence. Just because a trusted confidant or regular in your local pub has recommended something to you does not mean it is viable. The only way you can be confident in your investment is to take all the time you need to fully research the investment. When it comes to your money, never make rash decisions you could live to regret.
Categories: Outside Contributors