The ultimate goal of working hard today is to save up money so you can enjoy it later on in life. A big booster to this saving plan is making investments that are profitable and grow over time. Ultimately, everyone is looking for avenues that will give them maximum benefit with minimum expenditure.
People invest their hard-earned money with the expectation that it will help their wealth grow but ask anyone who has invested in something and they will tell you that it can be a risky business that can go south if not handled with caution.
To make sure that you don’t end up in financial troubles due to the wrong investment decisions, we’ve listed a few common hazards that need to be avoided so that your money doesn’t theoretically get flushed down the drain.
Get Ready to Play the Long Game
Investing is not a “get rich quick” system. Anyone who’s made any real money from investing knows that you have to be ready to play the long game, even though you’ll have to stay poised and ready to act quickly if need be.
If you go into investing with the idea that you want to make money very fast, it’s very possible that you will make irrational decisions that are impulsive and not very well thought out. You wouldn’t do proper market study or analysis before parting with your hard-earned cash. A good example is Day Trading (where opening and closing of positions happens within a day). While day trading is alright once in a while, it is not a sustainable strategy in the long term. Focusing on long-term goals will help you attain maximum profits.
Don’t Watch the Chart Too Much
It’s true that following market movements is an important part of being a successful investor, but watching the charts constantly can drive you to the opposite result. If you keep watching the chart’s every move, you will feel forced to pick a trade, which may not be the right decision at the time. While you mustn’t ignore them entirely, a better idea would be to follow a disciplined schedule so aren’t forced into making a jump when it’s not ideal.
Don’t Be a Blind Result-Chaser
Results are what everyone looks at. It goes without saying that investors love pursuing markets that are making money right now, but this focuses on short terms goals, i.e. make money fast. What happens in such a situation is that they are failing to look at the future movements of the markets, so that particular stock that’s climbing right now could very well come crashing down soon – along with all your money.
That’s not to say you should ignore rising stocks entirely, but you should be careful to remember that markets move with the influence of market movers. So before you put down an investment, just check whether your goals warrant such action right now.
Be Careful with Liquid Assets
Liquid assets are classified as those that you can open and close quickly without the price being affected too much, such as stocks and bonds, to name a couple. While these may seem attractive to invest in, it’s not ideal. The real money is in non-liquid assets such as real estate. These assets are quite straight-forward to purchase but require a bit more effort to sell. However, these are the kinds of assets a smart investor puts his money in.