Common mistakes new investors make

Common mistakes new investors make

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Entering the world of investing for the first time can be daunting.  It feels like an exclusive club where only those in the know make money.

 

This isn’t true.  Everyone can make money by investing, but there are a few tricks you need to know and mistakes you need to avoid.

 

You don’t have to make the same mistakes as other newbies.  Hence avoid doing these things below and you should be fine.

 

Only buying stocks for companies you know

I understand the temptation of buying stocks for companies you know.  You have seen their success and you know that their products and services are good.

 

But if you know that then chances are that other people know that too.  This means that you are not going to be getting a good price.

 

Plus, there is a whole world of places to put your money.  The ones that you know about won’t even account for 1% of the options.  Expand your mind and be prepared to invest in companies that you might not have heard of before.

Buying high

This is where FOMO (fear of missing out) comes into play.  We saw it happen with Bitcoin a couple of years ago.  Things were going well so everyone wanted in on the action.

 

When you buy high, you are paying a lot of money for something that someone else paid a lot less for.  Ideally you want to buy when they are at a low price, as there is a lot more to be gained then.

 

But timing the market is tricky.  Your best bet is invest consistently over a long period of time, then you will buy some at low price and some at a high price, but it will all average out in the end.

 

Ignoring fees

In order to access the markets to trade, you will need to use some sort of platform.  These normally come with fees.  The fees cover placing your orders and managing the admin.

 

Investing through a platform with high fees, which are normally a percentage, means that you are giving away potentially large amount of money.

 

The numbers might seem small enough, but when you work it out over the long term, you could end up with far less than if you had found somewhere with lower fees.

Aiming for the short term

If you are aiming for a quick win then chances are that you are going to be disappointed.  Even if your mate who works in the industry said it was a sure thing.

 

Anyway, a far more consistent option is to invest for the long term.  Historically, this has a solid track record of producing good returns.

 

Open an account, preferably one that is tax-efficient and start investing regularly.  Then be prepared not to access that money for decades.  Even if the market goes down, you need to keep on dropping the money in there.

 

What are your concerns about investing?

What is it that stops you from investing today?  If you are already investing, what have you learnt?  Let me know in the comments.

Disclaimer:  Remember the information you read here does not represent advice.  Any ideas or suggestions are just that and may not work for you.  Read the full disclaimer here.


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This Post Has 3 Comments

  1. Lucy Zelazowski

    Wow! I would be out of my comfort zone here. But I can imagine the rewards can be fantastic if you invest in the products.
    Thank you for giving me an insight into investing. Lucy Zelazowski – @londonbirdlucy

  2. Lyndsey cooksey

    The reason I haven’t invested is because I. Wouldnt really know where to start. But reading TV is post has given me a starting block to try. Thank you.

  3. Michael Fisher

    Another tip is never to follow any newspaper tips, they only recommend on strong past performance and generally before a fall

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