Investing your hard earned money can be a daunting task. Obviously you want to get as much interest as possible and have your money work as hard as possible for you. Unfortunately all investments are open to the one thing that we all have to deal with and that is risk. Investing in many ways is about managing risk. While high returns are possible, it usually comes with high risk. While very safe and secure investment are available it usually comes with a low return on investment.
So often novice investors get seduced by high return and even the promise of a "fail-safe" investment opportunity. The truth is that investing requires a lot of research and a level of learning. You simply cannot afford to invest "blindly" in this day and age. With that in mind, here are 3 common investing mistakes you need to watch out for.
1. Handing your money over to a fund manager or broker.
How easy is that. You simply take all your investment capital and hand it over to a professional broker or fund manager who invests it for you. After all, they are the professionals, right? Well, although getting advice is important and dealing with skilled brokers and fund managers is important, you and only you will be responsible for your investments. No one will care for your money like you do. Never take your eye off the ball.
2. Not diversifying your investments.
This is quite a common mistake - especially if you have success with one particular investment or investment type. Any good book on investing will encourage you to diversify your investments simply because it spreads out your risk. Putting all your efforts into one stock or one type of investment means that when things come crashing down you can lose everything. If you diversify then you can weather almost any financial storm.
3. Jumping onto "hot trends" and tip-offs
How many times have you heard of people who claims that their brother-in-law knows a broker that told him that stock XX will double in value over the next week. Or at least something similar to that. The truth is that these so-called hot tips never work out. Don't trust them. Don't let yourself be guided by fools. Unless you get advice like that from a legit and respected trader or investor, don't do it. Investing is all about making good and calculate decisions and investing your money on some tip is just plain foolish.
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