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Crucial Investing Mistakes To Avoid

Apr 17, 2008
As you begin investing, you may encounter various mistakes and commit various errors. These are all part of the learning process. However, there are certain mistakes one cannot afford to make. The biggest mistake you can make is simply to not invest at all! Start investing now, not later, and begin to let your money work for you. Even a spare $20 a week spent on investments is a good start.

While refraining from investing is definitely bad, a new investor is prone to do the exact opposite. Instead of not investing, or putting off investing until later, a new investor might put his financial status in dire straits by investing over and beyond what his current financial status would allow him to. This is another big mistake. In fact, getting into debt is one of the worst mistakes that a new investor can commit! Not only will you suffer from having to make monthly mortage or credit card payments, the funds that you can put into investing is instead spent on high interest loans. Getting your financial situation in order is the first thing you must do before you start investing. You must repay your debts, pay off your high interest loans and save a tidy sum of money before you are ready to allow your money to work for you.

A common mistake that investors make is investing to get rich quick. This high risk style of investment is more likely cause you to lose everything. Creating wealth is a long term goal. If it is easy to get rich quick, then there would be no poverty. Investing for the long term is the strategy to creating wealth. If you patiently weather the storms and keep your money in safe, stable, long term investments, you will begin to see your money grow. When investing for the short term, stick to safer forms of investment such as certificates of deposit. Even then, only do so when you know that you will need the money in a short period of time.

Apart from investing for the long term, another good wealth-creation strategy is to scatter your investments. Putting all your eggs into one basket is a big mistake that investors often make. Spread out your investments for the best returns, keep your investments stable rather than moving them around. Choose your investment carefully, invest your money and allow your investment to grow. Stay calm if your stock experiences a small drop, if you chose the right investment, it will go back up. Trust in your judgement, keep your investments stable. Once again, if you keep withdrawing your money if the stock drops a little, how will your investments grow? Keeping your money spread out among various investments also helps to safeguard your money against any sudden fluctuations in stock.

Lastly, many people think that their investment in old collectibles will pay off well. Again, it is not that easy to get rich. Don't expect your collection of Coke bottles or stamps to pay off your retirement fees! Depends on your investments made with cold, hard cash instead.
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