5 Investment Strategies to Avoid
Let’s face it—today’s market is as volatile and anxiety-inducing as ever. But that’s no reason to avoid researching and maintaining your interest in investing.
While markets can continue to drop into bear territory, they will also inevitably rise again. If you educate yourself well to invest the right way, those anxious dips in the stock market charts will never worry you again.
It is in your best interest to invest in real estate or other monetary assets, like stocks and bonds. In the world of investments, there are things you can do right, and there are things you can do wrong.
Here are some investment strategies to avoid, and how to avoid them:
Mistake #1: Having Unclear Goals
It is imperative to have clear, specific goals when looking to invest.
Creating an investment plan will help you to have a clearer understanding of what you’re getting yourself into. The plan will create a more direct path for you to achieve not only your investment goals but your life goals as well.
Rather than focusing on what’s trendy, focus on what’s best for you specifically in the long term. High-quality, wise investments are a long-term undertaking.
One of the ways you can clearly define and achieve long-term goals is to design, organize, and curate your investment portfolio. An investment portfolio is a group of assets, like stocks, bonds, cash, and other forms.
You can get higher returns by putting all these assets together in a portfolio to prove your end goals and risk tolerance levels.
The portfolio is categorized by asset class—stocks, bonds, and cash. Curating a portfolio that consists of all these types of assets will ensure a portfolio that is diverse and has a high ROI.
Mistake #2: Lacking Diversity in Assets
Diversity in your investment portfolio is of utmost importance. Different asset classes have varying degrees of risk. When you have multiple different types of assets, the risk averages out.
If you don’t diversify your assets and focus solely on one type, the risk is much higher. Imagine if the one asset you’re investing in performs poorly. Then you’ve got a real problem on your hands.
Diversification helps you avoid potential massive losses.
However, you should also avoid over-diversification. A portfolio that’s too diverse can reduce potential returns without reducing potential risks. To minimize risk and maximize return, find a good balance of diverse assets.
Diverse assets do include commercial real estate investment properties, and there’s no better place to look than on our website!
Mistake #3: Procrastinating
There’s never really the “perfect time” to invest. What matters most is how you invest, so there’s no better time than now! Don’t procrastinate.
The earlier you invest, the more time you have to make money. Simple as that. Starting early allows you to take a slower pace because you have more time to build your investment portfolio.
True investing is not gambling by any means. It requires significant research, planning, and dedicated time to do it well.
Stay aware, and don’t avoid starting altogether just because you aren’t sure where to start. Taking that first step in your investment education journey will inevitably benefit you in the long run.
Mistake #4: Educating Yourself Poorly
Proper research is the most important aspect of investing.
While you can do all the research you want by yourself, it is beneficial to hire a financial advisor to help educate and consult you along your journey. A financial advisor can assist with a financial plan, which will help create a direct tunnel to achieving your goals, and also help to curate your investment portfolio with a diverse (but not too diverse) range of assets.
Remember, dipping your toes into the investment world is only a gamble if you don’t know what you’re doing.
Educate yourself on all the types of assets, which type of asset is best fit for your investment goals, how the market is doing right now, and how the market is expected to do in the future.
Mistake #5: Panicking
Don’t panic about market trends as they happen.
Panicking shows a lack of understanding of how the market works. Panicking also shows that you don’t have a high tolerance for risk, a skill necessary in the investing world. If the stock prices show an indication of a bear market, that does not mean that panic is warranted.
Markets go up and down, and that’s just the way it is.
If you see stock prices fall, they’re going to rise again eventually. Just give it time. Time is of the essence, and patience is the ultimate way to invest well.
So, let’s review.
When looking to invest,
- don’t panic,
- don’t neglect research,
- don’t procrastinate,
- don’t limit your assets, and
- don’t have unclear goals.
These tips, plus allowing yourself plenty of time in planning and research, will help you gain the skills needed to invest well and get a high return on investment.
Want to learn why you should invest in downtown Fort Wayne? Sign up below for our Invest in Fort Wayne email series to learn more about the thriving downtown scene, top industries in the area, and more!
