Ok, let me get this out there investing mistakes are invetiable but they are easier to avoid if you see what mistakes others have made.
Investing sounds scary to many millennials that I know. Of course, with the 08 recession, many people were spooked.
If you do not want to work until you are 65, then getting rid of bad debt and investing is a MUST.
Of course, you don’t want to go into it blind, so here are a few investing mistakes to look out for before you start or to stop making if you are investing. Let’s get it started.
Fear
Fear of starting, yes, you have read about people making money in the stock market, you have seen the greats make money in the stock market, Warren Buffet, Phillip Fisher, Benjamin Graham, Peter Lynch, and many others.
Yet, you still have not jumped in the game; why? Yes, you are scared you are going to lose your shirt.
I say this start $5 a day is all it takes to change your life! You may think that you do not have $5 a day, or it is not enough; trust me, you spend at least $10 for lunch today; $ 5 a day will not hurt you.
If it does, find a way to increase your income. . .and get started!!! From 30 – 65, $5 a day or $152 a month on average will set you up for at least $400k+ at a 9% interest, just something to think about.
Timing the Market
The next mistake you are making is trying to time the market, buying, then turning right back around selling, thinking that the price could not go any higher.
Still, BAM, it goes higher, and there you go regretting jumping out or waiting to jump into the market until the next crash or until the next blue moon or whatever comes first.
Only to miss the gains before the “Crash” or whatever excuse you give yourself, stop trying to time the market and buy and hold, sure it takes a while to see gains.
Still, I have found that buying and holding is the BEST way to make money when investing.
To be honest, most people will not be able to time the market accurately and consistently, and that is a fact.
Not Investing
Not investing at all is a big mistake many people are making.
Especially young people, you could be missing hundreds of thousands of dollars by not investing, especially while you are younger in your 20s.
The longer you invest, the more your money can make you more money, which is a HUGE advantage when investing.
Not Taking Advantage of Company Stock
I almost made the mistake of not taking advantage of your 401k Employer match. In my first job out of college, around the first week.
An older gentleman asked me if I knew about the company 401k matching 50% of the first 8% invested, which is 12% in total.
I told him of course, but I will get to it when I can
He stopped me right there, took me to our 401k settings, and made me take out 8% to invest into my 401k.
I have been investing ever since. It will save you A LOT on taxes in the long term.
The average wage in 2019 was $51,916, and 12% of that is $6,229 at a 9% return for 30+ years will end up being $830K+ at the end of your working life.
You will not be a millionaire, but you will be able to change your kids’ life.
If you do not have kids, that is better than having nothing to retire on, especially with the average retirement savings at 65 being $206k.
Investing in What You Do Not Understand
Listening to someone else investment strategy without understanding what that investment is.
Your goals might be different than theirs; you may not be able to take that type of risk.
Most importantly, you should only invest in stocks and businesses that you utterly understand.
You should make sure YOU are responsible for what stocks, real estate, or business you invest in.
Do your research, and make logical decisions based on your goals and dreams. For instance, I invest in dividend stocks and ETFs, and someone else may say I am too young to be doing that, find growth stocks to get into.
They do not know the goals that I am going to achieve. Always invest for yourself! If you are making smart investments for yourself.
I hope these investing mistakes help you, somebody once said to me , “A fool learns from his mistakes but a wise man learns from the mistakes of others”
If you like this post or have any other investing mistakes, please comment below! I would love to read about it!