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Main Mistakes to Avoid When Investing

By , June 6th, 2016 | One Comment


Investing
Making your account balance grow is not the easiest task. Most of us struggle to save up and, once we can actually can accumulate some funds, the main question that arises is rather simple Рwhat to do with all of the money? There are tons of books on investing made till date, and while some of those can be useful to form a general understanding, it is nearly impossible to name the one that is applicable to the modern world. I am not going to advise you on how to invest. Today we are going to take a look at the main mistakes to avoid when investing.

Avoid the unknown

You may often hear about a great investment idea from one of your friends or colleagues. This may actually be a trigger for many people to invest. Well, hold your horses. The main idea about investing is that you should have crystal clear idea about¬†the place that you are going to invest. If you don’t know the ins and outs of the industry – save your money.

If, however, you do feel that such sectors as Fintech are booming, and you want to invest into one of the companies from this sector Рdo your homework first. Spend a week or two examining the industry, key players, major causes for the stock price change and so on. After the unknown became known, you may invest.

Don’t get on the hook

A lot of companies often try to lure you into using their services or purchasing their products by offering various “limited-time¬†offers” and various offers. The investing sector is not an exception too! This is especially true when it comes to online trading.

Even though some of the online trading brokers can be used for an investment, usually people end up losing most or all of their funds. The reason here is quite simple. Online trading is a high risk and, most probably, you do not have enough knowledge to actually generate the profits from financial markets.

Having said this, you will often see quite a few flashy ads that promise you a certain deposit bonus when you open an account with a brokerage. Most of those offers are scam. To be sure you can check such websites as forexbonuslab.com to verify whether the offer is legitimate or not.

In any case, unless you have good knowledge of financial market – stay away from financial trading. Especially from binary options.

 

Differentiate purchases from investments

Lack of knowledge in investments often makes people think that they invest, while in reality they simple spend the money. The idea behind investment is to generate additional funds with the help of your already earned capital.

When it comes to, for example, real-estate, many people think that they are investing when purchasing their first flat. I wouldn’t call it an investment as, firstly, the asset may deteriorate in its value. Secondly, your first apartment (provided that you live in it) will not generate any income, it will rather contribute to the cost reduction.

There are quite a few cases when people invest in the new cars, tech gadgets and other items they want to acquire for the sake of pleasure. Don’t confuse investments with purchases.

The bottom line

If someone tells you that investing is easy – don’t believe. Investing funds is, in fact easy. But successful investing is not easy at all. Never go for the sectors which you don’t know. If some niche attracts you, make sure to perform a throughout research before you commit your funds into it. Do not get hooked on gambling, trading or anything else just because there was an attractive promotion in place. And finally, investing is earning money with your money, it is not buying things for your own pleasure.

Photo: Flickr: Efloor Trade

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