How to Avoid Common Investing Mistakes

If you’re considering dipping your toes into the investment market for the first time in 2020, you’re probably searching for as much advice as you can possibly get. With the economy changing on what seems like an hourly basis and so much uncertainty happening around the world, investing may feel riskier than ever.

However, looking at the context of your personal finances in combination with the market could mean that there’s no time like the present to take the plunge. But before you do, it’s likely in your best interest to learn about some investment best practices and common mistakes to avoid.

To help you take on this journey with flying colors, we’re clueing you into some of the most common investing mistakes newbie and inexperienced investors commit. Read on to learn about how you can identify these errors and avoid making the mistakes of investors’ past.

Failing to follow a budget

Deciding to jump into the investment market is a serious financial commitment to make, requiring a substantial amount of planning and saving. If you determine that you’re ready to start making investments, you’ll want to be careful about how much you’re committing to your investment budget — after all, you don’t ever want to risk more than you can afford.  

The amount that you decide to invest entirely depends on your personal finances, investment goals, and the type of investment that you plan on doing. If you want to invest in real estate property, for example, you’ll need substantially more capital than buying just a couple of stocks and bonds. So, before you commit, make sure that you have an investment budget that you are able to follow. Failing to do so could mean that you wind up incurring debt or become unable to meet basic needs.

Not understanding an investment vehicle

Investing can be pretty complex, especially for individuals who are new to the world of finances. Understanding your investment vehicle is essential to forecasting the future of your investment outcome and planning for your finances. Before you begin investing, you might consider taking a course in investment basics to learn best practices for choosing and managing assets.

Following emotions rather than data

Whether you’re a new or veteran investor, you likely understand that there is a certain level of risk associated with all investment types. And in order to succeed in the investment market, you have to A) accept the risk and B) know how to minimize risk for the best outcome possible. One of the most common mistakes inexperienced investors make is allowing emotions to control their decision making, rather than paying attention to market indicators and data. Of course, this is all easier said than done considering how stressful investment can be.

To avoid the pitfalls of emotional decisions, many talented investors turn to stress-reducing practices, including:

By approaching financial decisions with a level head and a clear plan in place, you’ll likely see a more positive outcome.

Not diversifying assets

As we briefly mentioned, risk assessment plays a major role in investing, and some investments are inherently riskier than others. In order to position themselves for security and ideally, profit, investors have to find the right balance between those “safe” and risky investments. Diversifying assets is a critical step in the process. Diversifying assets means that you choose a combination of investment types and/or verticals to minimize your risk — basically, the investment philosophy encourages investors not to put all their eggs in one basket. This way, if one investment plummets, you’re not necessarily out of luck completely, thanks to your diverse portfolio.

Wrapping up

Jumping into the investment market can be a serious learning curve for newcomers and financially-savvy individuals alike. But with enough research and knowledge of common investing mistakes, you’ll certainly be in a more positive position as you start this new journey.

To review, investors should avoid these common mistakes:

  1. Not following a budget
  2. Failing to understand investment vehicle(s)
  3. Making emotional rather than data-driven decisions
  4. Not diversifying assets

Did we miss anything? Let us know what you’ve learned throughout your investing experience in the comment section below!

*** BEST STOCK NEWSLETTER of 2020 ALERT ***

Updated October 15, 2020

At WallStreetSurvivor, we subscribe to dozens stock recommendation and advisory newsletters. There is ONE newsletter that is constantly outperforming all of the others--The Motley Fool Stock Advisor.

TWO of Motley Fool's 2020 Stock Picks Have Already Quadrupled, ONE has tripled, and another TWO Have Already Doubled in just 9 months of of 2020!

We have been tracking ALL of the Motley Fool stock picks since January 2016. That's 5 years and 120 stock picks. As of Friday, October 23, 2020 the Motley Fool's January 2 stock pick (TSLA) is up 388%, their March 19th pick (ZM) is up 313% in just 7 months, and another two have more than doubled. In addition, 9 of their 2019, 9 of their 2018, 10 of their 2017, 9 of their 2016 and 14 of their 2016 picks have also doubled. Most impressively, over the last 5 years that we have been tracking every recommendation, their average stock pick is up 169%. That beats the SP500 by an average of 124%. And that's even accounting for all of this COVID mess that has wreaked havoc on most stocks. BUT, the Fool has done so well because they have quickly identified stocks this year that will perform well in the post-COVID world. THAT is how the Fool consistently does so well--they adapt and constantly pick stocks before everyone else realizes the opportunities.

  • PINS -- October 1, 2020 pick is already up 19%
  • FVRR-- September 3, 2020 pick is already up 36%
  • CrowdStrike (CRWD) -- June 4, 2020 pick is already up 41%
  • Shopify (SHOP) – April 2, 2020 pick and it is already up 196%
  • Zoom Video (ZM) – March 19, 2020 pick and it is already up 313%
  • DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 35%
  • Tesla (TSLA) picked January 2, 2020 before the crash and it is up 388%
  • HubSpot (HUBS) picked December 5, 2019 and it is up 105%
  • Netflix (NFLX) picked November 21, 2019 and it is up 56%
  • Trade Desk (TTD) picked November 11, 2019 and up 221%
  • Zoom Video originally picked Oct 3 and it is up 565%
  • SolarEdge (SEDG) picked September 19, 2019 and it is up 216%

Now no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super-profitable. The important thing about the Fool stock picks is you have to buy them the day they are recommended because they usually pop 5-10% in the first 72 hours after the release their recommendation. So to maximize your returns, you MUST buy them the day they are released. During this POST-COVID market we are in, they have been excellent at picking stocks that will excel. The average return of their 2020 stock picks is +68% which beats the market's return of only 12%. You sure don’t want to risk missing out on their next pick.

Normally the Fool service is priced at $199 per year but they are currently offering a NEW SUBSCRIBER DISCOUNT that allows you to get theiir next 24 stock picks for just $99/year. HERE is the LINK to visit their New Subscriber Discount page.

CLICK HERE to get access to all The Motley Fool’s Stock Picks and their next 12 months of picks for just $99 per Year! 



GET UP TO $1,000 IN FREE STOCK

WHEN YOU OPEN A ROBINHOOD BROKERAGE ACCOUNT

Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.

Here’s the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $500. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $500. Click here to learn more about this Special Robinhood offer.

Claim your free stock NOW (before it’s too late)



Leave a Reply

Your email address will not be published. Required fields are marked *