{"id":41384,"date":"2020-10-06T15:43:10","date_gmt":"2020-10-06T12:43:10","guid":{"rendered":"https:\/\/www.bondora.com\/blog\/?p=41384"},"modified":"2020-10-06T15:43:10","modified_gmt":"2020-10-06T12:43:10","slug":"6-mistakes-beginner-investors-make-and-how-to-avoid-them","status":"publish","type":"post","link":"https:\/\/goandgrow.eu\/en\/blog\/6-mistakes-beginner-investors-make-and-how-to-avoid-them\/","title":{"rendered":"6 mistakes beginner investors make and how to avoid them"},"content":{"rendered":"\n

It is only human to make mistakes, and that goes for every area of your life. But be it in relationships, family, work or investments, that doesn\u2019t mean you can\u2019t learn from your mistakes or prevent them altogether by learning from other people\u2019s mistakes.<\/p>\n\n\n\n

We listed 6 investment mistakes that beginners make so you don\u2019t have to make them:<\/p>\n\n\n\n

1. All in one<\/h2>\n\n\n\n

When a beginner wants to start investing, it\u2019s normal that he or she accepts recommendations from a friend or a content creator. Being a novice who doesn\u2019t know much about the various asset classes and different platforms, a new investor might feel the urge to apply all their money wherever recommended, putting all their eggs into one basket. And that can be a mistake. Diversification is vital<\/a><\/u> for any investor to help mitigate their risks.<\/p>\n\n\n\n

On average, it\u2019s expected that well-diversified portfolios will generate higher long-term returns<\/a><\/u> with lower risks to the investor. And who doesn\u2019t want that?<\/p>\n\n\n\n

\"That's
Thats not a clever strategy<\/em>.<\/figcaption><\/figure><\/div>\n\n\n\n

2. Investing everything<\/h2>\n\n\n\n

Common advice among investing experts is to only invest money that you can afford to lose.<\/p>\n\n\n\n

However, beginner investors who are eager to make money may get too excited when they see how they gain returns. That\u2019s understandable, especially if their money was previously sitting in a bank account with little to no yields.<\/p>\n\n\n\n

We know that feelings heavily affect our decisions<\/a><\/u>, so if these now-I\u2019m-making-money vibes take the best of someone who is just starting, it\u2019s possible that they\u2019ll put all their available money in that investment.<\/p>\n\n\n\n

Instead, new investors could benefit from being cautious, studying all the investment options<\/a><\/u> they\u2019re interested in, weighing the risks and then planning and making progressive moves. Don\u2019t rush, go slowly at your own pace, and make sure you make informed decisions.<\/p>\n\n\n\n

3. No plan<\/h2>\n\n\n\n

Some apprentice investors add their money somewhere and never check it, never study more about the subject, and never reallocate their money when necessary. They just let their funds drift off without a real sense of what\u2019s going on or where that strategy will lead to.<\/p>\n\n\n\n

Instead, have a financial plan<\/a><\/u>. How much do you want to diversify your portfolio and in what time frame? How much do you want to invest or gain? What will be your monthly investments? How often will you check your investments and rebalance your portfolio? Are you aiming for long-term or short gains?<\/p>\n\n\n\n

There are many ways to create an investment and financial plan<\/a><\/u>, but even just putting some rough numbers on a piece of paper is better than not planning at all. A plan is like a map that will help you reach the destination of your dreams.<\/p>\n\n\n\n

\"Planning
Planning is like building a path to what you want to achieve.<\/em><\/figcaption><\/figure><\/div>\n\n\n\n

4. No due diligence<\/h2>\n\n\n\n

Everyone can fall victim to “opportunities” that are too good to be true, but that\u2019s especially the case with investing newcomers.<\/p>\n\n\n\n

It\u2019s important to remember that all investment options come with a form of risk. Understanding these risks is important so you know what you are getting yourself into. If someone is offering you \u201cno risk\u201d or \u201czero risk\u201d investments, run away. If they offer gigantic return rates, be suspicious.<\/p>\n\n\n\n

Instead, research the platform or asset you want to invest in, understand how it works, check online reviews and never ever believe in offers that are simply too good to be true. Also, use recommendations from bloggers\/influencers\/friends as good starting points, but never follow blindly\u2014take the time to do your own due diligence<\/a><\/u>.<\/p>\n\n\n\n

5. Silly expectations<\/h2>\n\n\n\n

When you discover the world of investing and see your money grow and learn about the power of compound interest, it\u2019s hard not to get excited. And that\u2019s OK. But investments are\u2014for the most people\u2014not a way to get rich quick.<\/p>\n\n\n\n

If getting rick quick is what you\u2019re after, it will likely lead to pitfalls. Instead, be realistic with your expectations, write down the numbers, make a long-term investment plan and stick to it, adapting only when necessary.<\/p>\n\n\n\n

Craving quick returns might lead to 2 possible scenarios:<\/p>\n\n\n\n