Investing isn’t rocket science. The investor doesn’t need to be super smart or even study for years. What they do need is a little advise, a ton of self-control and a willingness to learn from others mistakes. Because let’s face it, we are human and that automatically means we make a ton of them. Keep reading to understand more, and learn what not to do.
1) Don’t get emotional
Emotions aren’t you friend. Sure it’s nice to have an adrenaline rush after taking a risk, to feel happy when an investment pays off. But you shouldn’t allow those feelings, the perceived possibility of those feelings, to guide your investment choices. Think, plan and ask the independent investment advisor Bournemouth for help. You should have guidelines for your investments, and discipline yourself to stick to them.
2) Think long, not short
One of the most important things to avoid is looking at things in the present. Part of investing is seeing the long term opportunities; measured over years, not days or even months. When investing, take a step back and think of the bigger picture.
- Will this be too risky?
- Is there a better option?
- Will this over diversify my portfolio?
This last point should be avoided like the plague. Over diversification doesn’t automatically spread your risk out. Instead, it can cause have consequences on your total asset allocation. To avoid this, choose a strategy and stick to it!
3) Don’t ignore the risk
Investments have a lot of risk involved, that’s why it can be good to spread out. Be careful though, as we said before you don’t want to over diversify and there is a thin line separating you from pure failure! To thoughtfully spread out the risk, adopt an asset allocation plan. You could buy in thirds, it will help you to control your investment while limiting the overall risk.
4) Don’t over save
After reaching a certain age, everyone is tempted to save for their retirement. It’s like the light at the end of the tunnel; full of relaxation, comfortable living and the opportunity to escape life. The problem is when you save so much for that point in time, that you accumulate a shed load of debt along the way.
It’s important to strike a balance, between the ‘now’ and the ‘later’. Be realistic, add a portion into your retirement plan and keep a bit out for emergencies, bills and all the other nitty-gritty costs that come with life!
5) Don’t get paranoid!
The market is scary. There are ups and downs, crisis and disasters and each one is carefully published in the news. The problem? Fixating on the minute by minute changes can cause you to lose sight of the bigger picture. As we said before, investing is about the long term objectives and possibilities. So, do not obsess or allow the changes to derail your plan! Remember, when in doubt contact an independent investment advisor Bournemouth.
6) Ignoring an investment due to the tax!
Ok, so you need to accept that investing means a tax bill. Any independent investment advisor Bournemouth will tell you that it’ll match the size of your investment, increasing as the value of your portfolio goes up! But you shouldn’t let this stop you from making a return. Remember, you will have to pay taxes sooner or later. So rip off the band aid or risk a drop in the possible return.
In the end, there is always a risk. The important thing is that you think, and anticipate the possible ups and downs as much as you can. This means having a clear head, discipline and avoiding the mistakes outlined above! As Warren Buffet said, success is about controlling the urges that leads to the downfall your follow investors!
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