Common Investing Mistakes

Investing wisely is not always easy, especially for those who are inexperienced at it and/or trying to figure out which investments to make on their own. Lots of people, especially early on in their investing ventures, end up making big mistakes that cost them big money, usually because they’re trying to beat the market. Unfortunately, their actions end up having the opposite effect from what they wanted, and they find themselves losing money instead of earning it.   

If you don’t want to be one of those people who loses money on your investments, check out these common investment mistakes, and make sure you’re not making them. If you are, there’s still time to change!

Concentrating on Just One Stock

When it comes to your investment portfolio, you need to have a diverse range of investments working for you. That way, on the off-chance that one of your investments fails, ALL of your investments won’t fail.

A good rule of thumb is not to have more than around 10% of your portfolio invested in a single stock. That’s just a disaster waiting to happen, and the higher up you go in terms of percentage of investments devoted to one stock, the worse the risk.

If you’ve currently got too much or even everything riding on one investment, now is definitely the time to protect your money by diversifying!

Making Only Domestic Investments

The United States is great, but it’s not so great that all of your investments should be America-based. It’s very important for your portfolio to include some investments in international funds.

Non-domestic equities make up around 51% of the stock market, so when you ignore them, you are ignoring a sizable chunk of your investment opportunities. Don’t ignore the possibility of making money through non-domestic stocks!

It’s okay to start small and just make one or two foreign investments. Then, as you gain confidence, and see how well your foreign stocks work for you, you can slowly add more.

Over-Trading

Trading stocks and other investments can be fun and exciting, but remember there’s always such a thing as too much of a good thing. If you’re trading too much, there’s a good chance that you’re actually earning a lot less than you could be, which is unfortunate, since the whole reason behind training is to earn more money!

This is not to say that you should never trade. Indeed, if an investment hasn’t been performing well for you for quite some time or you’re just plain sick of it, by all means, trade it. But, for the most part, hold on to investments that steadily earn you money, even if it’s not much. They can pay off big time after a while, and the longer you keep them, the more they’ll pay.

There’s a good chance you’re guilty of one of these investment mistakes or some other mistake. Most of us are. The good news, though, is that if you start working with an investment advisor soon, you can get back on the right track and put your investments to work for you.