It’s easy to be hungry for knowledge when you’re first learning how to invest your money. If you aren’t taught correctly, however, it’s easy to fall into bad habits and to make a lot of mistakes. If you’ve been discouraged that your investments haven’t grown the way you hoped they would, it’s possible that the lack of growth is your own fault. Here are some ways to improve your investing habits this next year.
Mistake #1: Going It Alone
Trying to learn everything on your own is only going to set you up for future investment failures. Instead of trying to figure out everything by yourself, learn from the pros. Ken Fisher, for example, has a plethora of best selling investment books, has written for Forbes for over two decades and offers lots of advice to new investors who want to learn the game. You can find more information about Ken Fisher (and other investment gurus like him) with a quick Google search.
Mistake #2: Trying to Fix Your Debt by Investing
So many people pay only the minimums on their credit cards and then invest everything else. Their hope is that their investments will pay off quickly and they can use that windfall to pay off their debts. All this does is keep your debt alive. If you want to be a smart investor you’ll concentrate first on paying off your credit debt and other bills and then focusing on your investments. This will allow you to invest more which will hopefully result in better returns. More importantly, you won’t be lying awake at night praying for a miracle in the market to come along and save your financial health.
Mistake #3: Investing in Only One Thing
It’s great that you have a lot of confidence in the thing in which you have chosen to invest. The problem is, though, that if that thing fails you lose all of the money you’ve invested and have no hope of ever seeing it again. That’s a huge risk to take. It’s much better to spread your investment money around and invest in a variety of things. Every modern study done on investing shows that people with varied portfolios fare better than those who take the “every egg in one basket” approach.
Mistake #4: Failure to Pay Attention
Setting up your investment and forgetting about it is a sure path to failure. Every person who has found investment success has found it because they paid attention to what was happening to their portfolio and to the market. You need to know exactly what is going on with your investments at all times. How else will you know when it’s time to make changes to keep your portfolio healthy? Even if you have a financial advisor taking care of your portfolio for you, check in with that advisor regularly so that you understand what is happening.
These are just four things that will help you become better and more successful investors in 2013. They’re small things that you can start doing right now but they’ll pay off in huge rewards later on!