If you have savings at the end of the month, you may be interested in investing money to see it grow. If this is your case, we want to tell you about some mistakes that can be very common, so that you can avoid them and make better decisions.
Investing money: 7 common mistakes you should avoid
1- Invest without goals
- Securities attorney comments that investing with a clear objective is important not only to feel motivated during the process but also to define the type of investment that best suits your goals.
- For example, if you are thinking about your retirement, the indicated thing would be to invest hoping for a long-term return.
2- Not knowing what you are investing in
- Many people get carried away by the enthusiasm and invest with false expectations, without prior investigation. This could cause you disappointment.
- Therefore, do not forget to investigate how an investment works, its level of risk, it is potential for profitability, commissions, consult the experience of other people, etc.
3- Not considering the deadlines
- There are two very important terms to take into account: the short term and the long term.
- If you invest for the long term but get carried away by the results in the short term, you could become discouraged and take actions that cause you to lose a possible future return.
4- Ignore the risk
- According to information published in La República, not measuring risk is a common mistake when it comes to investing that can become a headache.
- Always keep in mind the risk-return binomial, since although every investment seeks a return, there is no investment without risk.
5- Not knowing your investor profile
- What is your risk tolerance level? If you do not define it, it is possible that the results of your investment lead you to make rash decisions. Therefore, it is recommended that you identify what type of investor you are.
- If your tolerance is low, your profile would be conservative; if it is medium, you would be moderate; and if it is high, you could consider yourself risky.
6- Invest money that you will need in the short term
- The money you have for investment should not affect your personal finances, since ideally, it should be an amount separate from your important expenses.
- Therefore, it is advised that you only invest what “you would be willing to lose”.
7- Not diversifying your investments
- According to a Financial exploitation attorney, it is not recommended to put all the eggs in one basket, since if it falls, you will have lost all of them. It is best to invest in different alternatives to diversify risks.
- A pension fund is an example of a diversified alternative since it has investments in different financial instruments, infrastructure projects, international markets, among others.
- The product is available if you have been a member of the Private Pension System for at least five years.
Hope you would take all your financial decisions wisely.