3 Investment Mistakes I Made That You Shouldn’t Repeat | personal financing
Even though I’ve been investing for over a decade at this point, there was a time when I was new to the process – and wasn’t well informed about the best way to put my money to work. As such, early on, I encountered some stumbles. And even recently, it fell victim to a common mistake that affected a lot of investors. So now, I’m sharing my biggest mistakes in the hope that others won’t follow suit.
1. Playing is very safe
I didn’t really start buying stocks until I was about 30. Earlier in my twenties, I kept most of my money in cash to serve as my emergency fund. I do not regret it. But what am I? an act Regret is investing heavily in bonds in an era when I was able to take on more risk.
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Fortunately, I came to my senses and realized that despite the risks involved, stocks were a better option. But I lost several years of stronger growth in my portfolio with very conservative investing. I also realized that by avoiding stocks because of my fear of incurring losses, I was assuming another risk – that my money would not grow at a strong enough pace that I could comfortably retire.
To be clear, if you’re about to retire, bonds may be an appropriate investment, and you may want to make up a larger part of your portfolio. But if you’ve been decades away from retirement, stocks are the way to go.
2. Not enough diversification
Years ago, I was convinced that loading up on tech stocks was the way to go. But recently, I realized the hard way my wallet was technically too heavy.
Technology stocks have fallen in earnest this year, and as such, so is my portfolio. The good news is that I wasn’t overly invested in technology stocks – but in hindsight, I realized I was too heavily invested in this one sector.
For now, I’m trying to avoid selling stocks at a loss, and since I don’t plan to cash in on my portfolio soon, my hope is to weather this downturn and then diversify. But I need to move some money when the opportunity arises.
Whether you are new to investing or not, it is important to regularly check your investment mix and make sure it is sufficiently diverse. And if not, consider branching out into different market segments or buying some exchange-traded funds (ETFs) for immediate diversification.
3. Try market timing
I wrote before that timing the market is not working. But that doesn’t mean I haven’t tried it myself – and failed.
At this point, I’m not trying to stop the stocks at an all-time low. Instead, I simply aim to buy shares of high-quality companies on a consistent basis.
While it’s normal to want to buy a stock at the lowest price, it can be hard to tell. Your best bet may be to use a strategy called dollar cost averaging, where you commit to investing at regular intervals regardless of market conditions.
Don’t follow in my footsteps
We all make mistakes, and while I write about finances, I’m certainly not immune to them. But I’m sharing these blunders in hopes of guiding other investors on a better path.
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