Do you want to minimize your investment risks and maximize the upside? Here’s how you can avoid the most common investing mistakes at all costs.
Stock markets are heading downwards, and inflation in Canada this month hit 6.8%. If you’ve recently started investing, you might feel like you’ve found yourself in the wrong place at the wrong time.
But as any investing veteran knows, there aren’t good or bad times in investing, only good and bad decisions. To help you navigate these choppy waters, here are the most common investing mistakes to avoid right now.
Being Too Cautious
Most finance guides will tell you to manage your risks when investing and exercise caution before putting your money in volatile stocks or currencies.
But some investors take this advice to the extreme and to the detriment of their success in investing. They are overly cautious, slow to make decisions, and too reliant on low-return stocks.
The result is that they don’t make the money they should.
That investment effort and money get wasted on returns that are only marginally better than what they might have achieved in a decent managed account from a financial institution.
Lack of Research
It’s tempting to invest in a company because a friend or colleague made money from it. But you should never invest in a business or an industry that’s alien to you. If you don’t understand the product or service, steer clear.
Even when you feel ultra-confident in your investment choices, you should still do plenty of regular research to stay up to date with that company’s challenges and opportunities.
Failing to Check Fees
Fees might feel like an overhead that you can ignore, but they aren’t. Different trading exchanges offer extra costs depending on the figures you are trading. They could significantly impact your profit margins.
A smart investor will always check the fees for their investment portfolio. Calculate what you’ll pay in the future if you increase your investment.
Ignoring Cryptocurrencies
You might prefer to invest in shares, but cryptocurrency isn’t something that you can ignore forever. It makes sense to at least get to understand how these currencies work and the different types on the market right now.
Most people have heard of Bitcoin, and many are familiar with Eretheum. But you’ll want to get to know some of the other major cryptocurrencies, such as Tezos. Here is a guide on how to buy Tezos.
Making Emotional Decisions
Panic buying and panic selling are genuine problems in investing. It happens because investors fall into an emotional state of mind when driven by fear.
Always take the emotions out of investing, and use objective criteria for all your decisions. That will stop you from becoming too emotionally invested in shares or currencies and failing to spot what’s happening around you.
Avoid These Investing Mistakes at All Costs
Many failed investors have made these investing mistakes. Don’t follow in their footsteps. Use this as your guide to savvy investment decisions in 2022 to help you get to the other side of this economic turmoil.
And if you found these tips valuable, read some of our other finance articles in our business section for more investment recommendations.