Are you a new investor or thinking about investing? You should be aware of the seven repeat mistakes that most new investors make, and learn how to avoid them.
When you start out as an investor, and are new to the regime, you are going to make some mistakes. It’s quite natural! Investing comes with a certain amount of inherited risk factors. When you make an investment error, you are going to lose valuable time and / or money, and therefore, it’s important that you know about these mistakes before you start investing, so you can avoid making these mistakes.
Our observation shows that some mistakes are more common than others among new investors. This is especially true for those interested in mortgage and other note investing.
We have selected seven of the most common mistakes that new investors make, and are offering up solutions so that you’ll be able to avoid these mistakes in the future.
1. Failure to Plan Ahead:
There is an old saying that goes like this – “If you don’t know where you are going, any road will take you there.”
You need to be clear on your goals and objectives. Be clear about what you are trying to achieve, know your risks and obstacles are, and also know your appropriate benchmarks.
The Solution: Have a long term policy and guidelines that are written down. Stick with this guide even when the market conditions are against you. It will be more profitable in the long run, rather than trying to change your policies and trying to time your investments.
Overconfidence can become a serious obstacle to your successful investment. Overconfidence leads to negligence. You may develop the idea that you know it all; you don’t need any financial advice. This can be a devastating thought.
The Solution: If you are a typical new investor, you are by no means an expert, and believing that you are, could lead to your financial disaster. Working with a financial advisor or mentor can be a smart idea. Also, don’t be so sure about yourself in the beginning, spread out the risks; don’t put all your eggs in one basket. We at Keyhole Academy are also here to educate, mentor and develop! If you’re looking for mentorship. You’re in the right place!
3. Spending too much time on Financial Media:
Are you spending too much time watching financial news shows or reading newsletters or attending investing webinars? Many beginning investors make that mistake, thinking that it will help them achieve their goals. The truth is there is hardly anything on TV or newsletters or financial media channels that can help you to achieve your goals.
The Solution: It’s not about how much information you receive. The most value to you comes from processing the information, and from information that’s relevant to you. So, avoid spending too much time on financial TV shows or media channels; focus on real investment plans that work for you, not on investment myths. By working with us here at Keyhole Academy, it’s more than webinars or newsletters. While we surely supply those as supplemental content, you also receive in-depth courses, and personal mentoring and attention.
4. Making Investments Based on Market:
Investors often make the mistake of trying to time their investment. They tend to invest their money when the market is on the upswing and pull money out when market starts to fall. You may find it interesting and think of strategic ways to maximize your profit through timing. However, none of these strategies work in the long run.
The solution: All investment markets are forever changing and we should not speculate when to make an investment. It’s best to start investing as soon as you can. Instead of putting your money in when the tides are high and pulling it off during the low tides, let your money go with the flow. It gives you a better chance to catch a high tide, and you have less risk of missing out on a great opportunity when you are waiting on the sideline. Remember, if you are reading about a trend in the general news media, you are probably too late.
5. The Emotional Roller Coaster:
Normal human emotions often take over the rational part of the human brain causing us to make wrong decisions. We are hardwired to our survival instincts where the normal emotional response to rising markets is to feel confident and positive. We are also often distracted by attractive packaging rather than the actual commodity. On the other hand, our emotions tell us to run from danger and hide away from the harm’s way, when we are faced with challenge, and so, we feel happy and confident when we see gains but panic when the market starts falling.
The Solution: Market are never static, they move in cycles. Stop feeling bad about your bad investments. Strong emotions can cloud your judgment and lead to more bad decisions.
6. Too Much Focused on Short Term Goals:
Most beginner investors are focused on their immediate short term benefits, trying to make quick money in any way they possibly can. However, this often causes significantly higher risks and lower returns.
The Solution: In any type of investment you must focus on the long term benefits. Avoid short term strategies, and be patient. Successful investors have the ability to remain calm when others freak out.
7. Chasing High Performance:
Many investors make the mistake of rushing into high performance deals, by choosing high performance strategies. They also choose managers, assets, and investments based on high performance. Chasing high performing deals has probably led to more bad decisions in investment than any other factors.
The solution: High performance demands higher stakes and involves higher risks. Starting out, stick with investment plans that you are able to handle. You probably don’t need to spend too much on high performing ideas, personnel, or assets.
It’s not intelligence, money or superb marketing timing that gets you high returns on your investment. The key to success in investment is to start on a solid foundation. Build your knowledge, identify and avoid these very basic mistakes early on in your career. With a little bit of practice, you will surely make a solid return on your investment.
Want to learn more? Checkout The Business of Investing in Second Mortgages from Keyhole Academy. Got a question or comment? Please put down your thoughts in the comment box below. Also, it would be really great if you visit our Facebook page and like it as well.
Source: Keyhole Academy