Skip to main content

5 Common Investment Mistakes You Should Avoid

Source

Everyone should start investing right away. However, you must invest with clear intentions if you want to avoid making costly mistakes. Mistakes can be so costly that they discourage you from investing again.

What can you do to avoid making investment mistakes? Read this article.

5 Common Investment Mistakes You Should Avoid

1. Investing with Emotions

When investing, remove emotions and use logic and calculations alone. Remember that you are not the only one assessing the asset you intend to purchase. You simply do not start an investment because you like the product.

Consider the fundamental and technical metrics of the asset. If they match your investment goal, go for the asset.

2. Not Considering Market Emotions (Direction)

The only time you should consider emotions is when you want to analyze the emotions of others. By the emotions of others, we mean analyzing if the asset will continue being useful to people in the long run.

If people are tired of using a product and you see them migrating to another product, that is a sign that the latter product will go up in value. As an investor, you must know where the market is heading and rebalance your portfolio to fit the market.

3. Lack of Investment Goals

Don’t just start investing without outlining your goals. You need to set goals. Some things to consider are:

  • Required or expected return: How much would you like to get in return for your investment? Take this as a rate (i.e., percentage). How much percent return would you want in a year or so? Only go for assets that exceed this rate.
  • Maximum risk exposure: How much in percentage would trouble you so much if you lose it? That is your maximum risk exposure. Only go for assets with risk exposure below your set risk.
  • Dividends, coupons, or regular payouts: Would you love to be paid regularly? Some stocks pay dividends while most bonds pay coupons. If you prefer these regular payouts, go for assets that give them.

Only start investing after setting your goals. Thankfully, it does not matter the metric you are checking, the Assessworth platform shows you all you need to know for a specific asset.

4. Lack of Diversity in Portfolio

How many assets are in your portfolio? How many of them are related to others in the portfolio? The best portfolio is one with assets that are not related at all.

Look at this: If you have the stock of two different banks, it means that your portfolio will always head towards a direction, as the same forces can affect both banks equally. However, if you have the stock of a bank and the stock of a company in the medical field, you’d have a diverse portfolio.

With a diverse portfolio, when the market is heading in the wrong direction, you can be sure that so many assets in your portfolio will still be heading in the right direction.

5. Not Rebalancing Your Portfolio

Portfolio rebalancing has to do with realigning your portfolio to match your initial goals. Recall that you are not the one who controls the market. This means that the assets in your portfolio may grow faster or slower than what you projected. Also, some may not give as many returns as you need.

After a while (let’s say a year or six months), you have to monitor your portfolio and ensure that it is still in line with your goals. If it is not, you have to rebalance the portfolio by reallocating your wealth across the assets in your portfolio.

Thankfully, you can see the assets in your portfolio that are no longer suitable for you using the Assessworth platform. You can also reconstruct your portfolio with ease.

Conclusion

Here at the Assessworth platform, we want to help you reduce or even eliminate your risk throughout your investment journey. Awesome, right? Join us to maintain a risk-free investment experience.

Popular posts from this blog

7 Simple Tips to Choose the Right Stock: No Calculations Needed

If you have ever tried buying a stock, you surely would have felt the doubt about pushing through with your decision to buy the stock. “Is this stock right for me?” and “Am I making the right choice?” are questions you might ask. You are not alone if you can relate to the outlined doubts or questions. Don’t worry, I am here to guide you so that you can make the best decisions. Keep reading this article to learn 7 simple tips to choose the right stock. Disclaimer: You do not need any technical knowledge or formulas for now. How to Choose the Right Stock: 7 Super Easy Tips Source Choosing the right stock for you is easy when you consider the following tips: If you are a customer, consider how likely you’d keep being one Define your financial goals Learn more about the company via news articles and public opinions Research the rewards and risks of the stock Think long-term, starting today Always think diversity If you’d love to learn more about each of these tips and how they’d help you, ...
Read more

Course: Introduction to the World of Investment

  If you are totally a newbie in the world of investment, this course is for you. Don't worry, the terms are highly simplified and the topics are well-arranged to carry you along from level zero to hero.  Remember that we are always here to help. If you have any questions, go to the education section of the AssessWorth platform. An experienced investment advisor will respond quickly. Introduction to the World of Investment You are new to investments and might be afraid of financial numbers or do not know where to start. Here are beneficial courses for you: 1. Why Should You Invest? Future-Proof Your Finances Read Here So many people do not invest today because they do not see the need for investment. Well, considering the status of things today, no one should avoid investing. For example, you just might be losing your wealth without knowing. Want to learn how and also the reasons you should start investing? Read this article . 2. 5 Investment Opportunities for You Read Here B...
Read more

5 Investment Opportunities for You

Source New to intentional investing? Look no further, as we are here to guide you through the entire process. Now that you have an interest in investing, you must learn different quick and conventional parts you can follow. Read this article to expose yourself to the world of investment. 5 Investment Opportunities for You 1. Stocks You can buy the stocks of publicly listed companies. You can also buy the stocks of private companies. However, the stock of public companies is more accessible. Buying the stocks of a company makes you a part-owner of the company. This means that you will receive dividends like other shareholders. You can even vote in important elections. What's more? The price of company stocks changes over time. Therefore, you can make more money in the returns of a stock that grows. 2. Bonds Bonds are like debts that an entity has to pay back to you. For example, you can purchase government bonds. This means that you are lending the government an amou...
Read more