2 Common Investment Mistakes To Avoid: How To Protect Your Money

Investments are often full of surprises—both good and bad. While you can't always predict the market, there are certain investment mistakes that you can avoid. Here are two common investment mistakes to avoid.

Timing The Market

Many investors try to time the market by buying when they think prices are low and selling when they think prices are high. This strategy is often unsuccessful because it's difficult to predict exactly when the market will rise or fall.

Even if you can correctly predict the market's direction, you may not be able to buy or sell at the right time. As a result, you could miss out on potential profits or end up selling at a loss.

Instead of timing the market, it's best to invest regularly and let time work for you. You can do this by investing in a diversified portfolio that's aligned with your investment goals and risk tolerance. For instance, say you're investing for retirement. In that case, you may want to invest in a mix of stocks, bonds and cash so that you can achieve your goal while taking less risk.

Likewise, if you're investing for a shorter-term goal, such as saving for a down payment on a house, you may be able to take on more risk since you have a shorter time horizon. In this case, you may want to invest primarily in stocks since they have the potential to provide higher returns than other investment types.

By investing regularly and diversifying your portfolio, you can help protect yourself from market volatility. You could also increase your chances of achieving your investment goals.

Investing Without A Plan

Another common mistake is investing without a plan. This often happens when people invest in individual stocks without considering their overall investment strategy.

For instance, say you buy shares of a company that's in the news because its stock price has been going up. You may not have considered whether this investment fits your overall strategy. As a result, you could end up taking on more risk than you're comfortable with or investing in a company that doesn't align with your values.

Investing without a plan can be risky since you may end up with a portfolio that's not diversified. This mistake could leave you vulnerable to losses if one of your investments doesn't perform well.

To avoid this, it's important to have an investment plan. This part doesn't need to be complicated. You can start by creating a list of your investment goals in the time frame that you want to achieve them.

If you're not sure where to start, you could ask an investment management service for help. They can assess your goals to create an investment plan that's tailored to you.  

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