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We get it, jumping into the investing world isn’t easy. There are tons of new moving parts to keep track of. You’re probably overloaded with information about the ever changing stock market, still learning how to master all of the investing jargon and scared about where your money is going. We understand the plight of the investing beginner, it’s a lot to juggle. Even worse? It seems like everyone has conflicting advice on where and how you should invest your hard-earned money.
Like all things, investing can be learned and even mastered through self-teaching. We think the best way to teach yourself is to study where other people went wrong. Even Wall Street professionals are still learning every day, and we all have to start somewhere.
Mistakes happen, but we really don’t to fumble when money is on the line. Lucky for you, there are hundreds of people who have learned their lessons in the stock market, so you don’t have to make their same mistakes. Instead of trying to take everyone’s advice, learn from investing beginner’s mistakes. Welcome to investing 101, where we will tell you what exactly not to do.
Here are the investing mistakes stock market newbies make that you shouldn’t.
Trading Too Much
Maybe you watched the Crypto boom and saw people make tens of thousands on their investments in a short time. If you were paying attention, you might have seen that those investors could have made even more if they kept their investments for longer.
When you’re investing, commit to being patient throughout the long haul. You will thank yourself later.
Stop playing hot potato with your investments, you’re stealing from your future self. You knew when you signed on that the stock market is no place to make quick cash, so stop trying. Investing is about the long haul. Keep your investments, plant the seed and watch it grow for years to come.
That’s not to say that you should never sell your stock. Find a way to sell your stock if it does not make sense for your risk tolerance, or if it is plummeting because a permeant change to the stock or market the. investment is in.
Don’t sell to make a quick buck, you’ll cheat yourself out of even bigger bucks later.
Trying to Time the Market
The stock market is based on countless moving parts that can change the price of sticks by the second. The amount of data one must analyze to perfectly time the market is astronomical, and simply cannot be done by just anyone (especially a beginner).
Research done by Charles Schwab shows that there is an extremely high cost for trying to time for perfect market entry. The longer you’re in, the better. New investors should focus on broader market trends to inform where to invest, instead if hyper-focusing on volatile changes to decide when to invest.
Let’s face it, the best time to invest was yesterday. As much as you can try, you can’t perfectly time the market. By trying, you’re wasting your time and money. Once you find what you’d like to invest in, just do it, the right time is now.
Investing in Your Emotions Instead of The Market
Our money and what we do with it can be intrinsically tied to our emotions, and we can get into some sticky situations when it is. Investing can be life changing; it opens doors for retirement and can provide the financial security to start a new pursuit to happiness that may not have seemed possible before. Money matters, financial freedom is important, and investing can play into our greatest ambitions.
Here’s the hard part: taking all of those hopes and ambitions and throwing them out the window. We can’t let our emotions be the sole factor of our investing decisions. We need to let our mind’s intuition take the wheel when investing, not our heart’s.
Every new investor has big dreams for their investing journey. We need to inform our decisions on our own unique budget, risk tolerance, and goals, not someone else’s. It’s time to believe in yourself and have confidence in your investing knowledge while being completely practical about your starting point.
We all have financial heroes but copying Warren Buffet’s portfolio won’t really do you any good. Investing is personal, choose smart investments that work best for you. No, that does not mean that you should only invest in your personal favorite companies. Find balance in your ambitions and your reality, and make a money plan unique to you.