Investing has recently become one of the most important ways to make money. The number of people interested in investing is constantly increasing due to its attraction. However, mistakes made here may result in the resetting of the investments in an instant. New investors in particular need to be extremely careful and avoid fatal mistakes. Which investments are considered wrong? What are the things that lead you to make mistakes when making a decision? All are in our article.
1. Not Diversifying Your Investments
Making your investments in a single field carries a very high risk. If your preferred field moves downwards, your entire investment may be lost in an instant. To avoid such a situation, you should diversify your investments. In other words, you should use the money you have allocated for investment in more than one field. For example, you can use different tools such as real estate, precious metals, and cash at the same time.[*]
A fall in one of the fields you selected does not indicate a fall in others. Many experts state that it is rare for all investment instruments to fall or rise at the same time. At this point, you should diversify your investments and reduce the risk you take.
2. Having Big Expectations in a Short Time
Making the right investment can bring in serious amounts. But never think that just by investing, you will solve all your financial problems in the short term. The reason is it is not as easy to make a high profit in the short term. You also need to take very high risks to try this.
Many of the investment tools can tell you how much you will earn in the long run. You can easily understand this when you examine the data of the past years. However, it is almost impossible to predict how much you will earn in the short term. Therefore, make sure your expectations for the short term are realistic. If possible, do not expect anything in the short term and all your expectations are for the long term.
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3. Not Following the Investments Regularly
After diversifying your investments, you should check them regularly. Because with these controls, you can stick to the plan you have made for yourself. Otherwise, things will get out of hand and your investments will be jeopardized.
For example; you set your investment portfolio at 50% – 50% and set aside $ 10,000 for each investment. Let’s assume that one of your investment instruments increased by 20% at the end of the year, and the other remained unchanged. Thus, one of your investments will be $ 12,000 while the other will remain $ 10,000. Thus, the ratio in your portfolio will be approximately 55-45%. At this point, you must then make a new plan or stick to the old plan. In both, you will need to reshape your investments.
4. Expecting the Same Performance from Each Investment
Once you diversify your investments, you must accept that each will perform differently. This is good news if some of your investments are rising. However, it doesn’t mean everything is fine. Similarly, it is of course sad that some of your investments are performing poorly. However, a general evaluation cannot be made by looking at them. The important point here is to know how investment instruments move and to make appropriate adjustments.
There are more than one investment instruments you can choose from in the market. As stated above, all of them can’t rise at the same time. During the selection of instruments, you should be aware that each of them will perform differently and some may fall. Thus, you can make much more accurate planning.
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5. Believing in Every News/Advice
It is a fact that communication tools are highly developed today. Due to this situation, you can access many sources quickly. Although this situation seems positive, you should confirm the accuracy of any news or advice you reach. In the case of news in the field of investment, you need to deepen your research.
Be suspicious of what experts on economics channels say or articles in financial magazines. Do not believe all the news you hear. Shaping your investments according to such news may mislead you.
6. Not Taking Inflation into Account
When calculating how successful investment instruments will be, pay attention to the inflation factor. Inflation is a fact and it expresses the rate of increase in prices from year to year. To determine whether an investment instrument is profitable for you, you also need to take inflation into account. [See]
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7. Working with the Wrong Consultant
Most investors work with a consultant. You have to work with the right consultant to make the right investment. If the consultant you work with is incompetent, this will be a complete disaster for you.
As InvestLatvia, we meet your needs in this field with our expert consultants. You will minimize your risk level and make a serious profit from your investments thanks to our consultants. Besides, you will benefit from advantages such as incentives, tax reductions, and residence permits through your investments.
You Can Speed Up the Process and Make It Easier by Examining Our Professional Services While Making Your Investments!
Igors Krumins continues his activities as a commercial and international lawyer within the body of “Jurmala Invest”. He has more than 10 years of experience, especially in the investment sector, and has provided consultancy services to numerous companies with his legal expertise. He successfully completed his undergraduate studies at Baltic International Academy and graduate studies at Latvijas Universitate. Apart from his native Latvian language, he can also speak Russian and English fluently.