If you’re just starting investing, this post outlines a few common “newbie” mistakes to try and avoid. With the sheer volume of investing information, you may be overwhelmed there, but we hope to help break down a few of the basics. The last thing you want to do is make a blunder right out of the gate!
1. Don’t chase the noise without watching the trends
When you’re first starting out, you may be drawn to what’s currently “hot”. Our first thought, if everyone is talking about a company, then why wouldn’t you invest?
Current performance does not guarantee or indicate longer-term performance. All the buzz attracts inexperienced investors the same way light attracts bugs.
Keep your focus on better-performing investment avenues over time and start to learn how to assess long-term trends over short spurts. While there is no guarantee for anything, you’ll have some more reliable insight going this route.
2. Avoid FOMO
If you’re seeing big investing trends toward one area, that shouldn’t suggest that this area will continue to post solid returns. Avoid allowing an emotional response of fear drive your logical investment decisions.
Don’t jump the gun just because you’re afraid you’re missing out.
3. Panic Selling in the Dip
Consider this example: you work with a financial advisor who takes a modest sum of $5,000 into several areas of well-researched stocks and bonds. Then, much like what’s going on right now, everything takes a turn into a bear market.
As you see your fresh, new investment drop, you may start feeling panic. After all, you’re just starting out and you’re supposed to make money through investing, right?
The best method to weather these storms is to try your best not to panic. Much like FOMO, decision-making that comes impulsively is likely against your best interests. If you panic and sell because you’re just starting out and dipping, you may work against your long-term investment strategy.
Looking for more investment tips from a financial advisor? Working with a professional can help to put your mind at ease and make much more logically grounded decisions about your investments.