Today I am going to talk about investments but in a generic way. Whether it’s an investment in the stock market, in real estate, in a Startup or anywhere else.
Very simple, because regardless of the type of investment, there are some investment mistakes in which everyone usually commits.
I must confess, some of them have happened to me several times in my life, others have not, but surely a person who ventures into the world of business and investments will fall sometime if he does not start off on the right foot.
So, since everyone likes to make their money profitable, what better way to do it than by avoiding some of these common mistakes when investing money.
8 most common investment mistakes
1 – INVEST WITHOUT A PLAN
Everyone wants to invest their money to make it profitable, but without a plan, the thing is not right.
It’s simple Does it cost the same to generate U$D 1 of an investment than U$D 10,000?
So before investing the ideal is to have prepared a plan that answers several questions, including, what role plays the investment vehicle that we are using and why (With what objective) we are using it.
Recall that there are investments in the short, medium and long term and each of these options has different investment vehicles, which we should know how to arrange them in our investment plan.
2 – INVEST LITTLE
Are you looking for an investment with a 100% return? I know one. Buy a gum for 10 cents, look for someone who desperately wants one and tries selling it for 20 cents.
Wow !!! An investment of 100% return.
But is it good enough?
What did they expect for 10 cents of investment?
To get really amazing returns, you have to invest good amounts of money. It is not about looking only for a high return and nothing else, but also to invest an adequate amount of money.
3 – BEING TOO AGGRESSIVE
There are people who believe that putting all the eggs in the same basket and in the short term, will achieve a very good investment.
The aggressiveness at the time of investing should be based on the knowledge one has about the type of investment that is being made. This is one of the most common investment mistakes in what people fall for.
Basically, it’s about going with everything and you end up turning the investment into a bet.
4 – BEING TOO CONSERVATIVE
Just as there are people who are too aggressive when it comes to investing, there are also people who are too conservative and for that kind of attitude, they never get good returns quickly, but rather they get them in small installments.
This is another of the most common investment mistakes in which people fall.
Not knowing how to find that balance and not knowing how to move between one extreme and another depending on the type of investment.
5 – DO NOT KNOW ABOUT THE INVESTMENT VEHICLE
Every time we make some type of investment, we are using our money in what is known as an “investment vehicle”.
I really like this concept, because it’s just that, a way to transport our money as it grows.
IF THEY DID NOT KNOW HOW TO DRIVE, WOULD THEY DARE TO DRIVE A FERRARI AT 250 KM PER HOUR? I REALLY DOUBT IT.
The same happens with investments.
Another of the most common investment mistakes in which people fall is not to study or know about the investment vehicle in which they are putting their money.
In short, if you do not know anything about the stock market, then do not buy stocks yet.
6 – DISAGREE FEES, TAXES OR COMMISSIONS
There are many investment vehicles (for example, an investment fund) that do not allow us to withdraw the money just like that. They have different taxes, fees and even commissions.
In summary, before putting a penny in any investment vehicle, it is best to know all the taxes, commissions and fees that could appear in case we want to do something, such as withdrawing our money.
7 – INVESTING IN A BAD MOMENT
Many times people come to investments when it is already late. This is what I call investing as lemmings.
This is one of the worst investment mistakes that people tend to fall into. Invest when everyone is already doing it.
Businesses and investments are based on opportunities, on finding just the right moment to invest.
Take a property for example. It is not the same to buy it from the well than to do it when the work is already advanced (Pre-sale) than to do it when it is finished (Stage of sale)
Many people believe that pre-sale is the business, although actually buying from the well would be the best.
8 – DO NOT DIVERSIFY
Finally the last of the most common investment mistakes in what people fall into goes hand in hand with being too aggressive and putting all the eggs in the same basket.
What do I mean?
The investments, as I mentioned earlier, can be divided between the short term, medium term and long term. Therefore, the ideal would be to diversify them a little in order to have different deadlines and not just invest in a single vehicle.
I hope that these tips or rather investment mistakes that you have to avoid, will help you and see investing as something that everyone can do as long as they do it the right way.