There’s no time like the present to start investing; even if you feel silly only investing 1% of your income, do it anyway – it adds up over time. However, be careful to avoid making the following investment mistakes.
Focusing on Short-term Investments
While short-term investments like certificates of deposit (CDs) and treasury bills can be a beneficial component of your financial portfolio, they shouldn’t be the only component. Short-term investments may be low risk, but they’re also low return in comparison to medium- and long-term investments.
Failing to Diversify
Another common mistake made by new investors is not diversifying their portfolio. By diversifying your portfolio, you’ll mitigate risk while also adding different sources of return. If you currently invest in gold, for instance, consider diversifying with stocks.
Selling Too Early
Every stock investor has been guilty of this at some point. When you see a sizable return after just six months, you may feel inclined to hit the “sell” button in fear that the trend will reverse. Granted, there are times when this happens, but nearly every financial planner will agree that it’s better to play the long game with your investments.
Paying Too Much Attention to Past Performance
Don’t judge the potential of an investment based solely on its past performance. While past performance is a helpful indicator of an investment’s potential, it doesn’t predict the investment’s future with certainty.
Making Investments Based on Emotion
It’s easy to let your emotions get the best of you; unfortunately, this can jeopardize your portfolio, leading to poorly made decisions regarding your financial future. Base your investments on data and insight, not emotions.
These are just a few of the most common mistakes new investors make. If you want to maximize your return on investment, contact us today. Holdfast Wealth Management is the industry’s premier investment and financial planning agency.