If you are curious to learn about investment planning mistakes that are done by most investors then this article is for you.
At the point, we start earning we start making plans to fulfil the dreams that we have had since our childhood.
We start making some plans for how we can buy the latest electronic gadget or make a trip to the most dreaded spot. Also, we need to work hard every day to earn a lot of money. But why not let money work for us?
You may get surprised listening to my words. This is only possible through smart and disciplined investing. Investing seems like a stress-free side hustle. You also need to put time, effort, and patience into investment to have the desired output.
Here, in this guide, we are going to put together the 5 investment planning mistakes you never knew you were making before. Let’s dive into the deep!
1. Wait for the right time to start investment:
Many of us just insist on waiting for the right time to start investing. But you should think twice about why that right time never comes. Because there is no much better time than right now to start your investment.
So, do not wait for more, and start your investing today. Perhaps, you have learned that: “Time is Money.” And if still you are feeling lethargic towards the idea of investing right away then you must keep in mind that the sooner you will start investing, the more time you will put into your money to create your wealth.
Your money will get more time to create your wealth by maximizing the power of compounding. On the other hand, the more you will delay and wait for the right time, the maximum chances will be of getting failure to accumulate the desired corpus on time.
2. Stick on sub-optimal investments such as FDs, PPF, etc.:
Sticking on sub-optimal investments like FDs, PPF, etc. is probably the biggest money eater for most of the investors who invest but still fail to wealth creation.
Most people stick to these traditional investments that offer sub-optimal returns. These investments prevent your money from actually maximizing the potential of wealth creation. These investments are incapable to beat inflation.
Besides, you have knew that mutual funds come with relatively higher returns. If you still choose to stay away from the riskier mutual funds then it is the right time to get shifted.
Yes, mutual funds are the riskier elements since they invest your money in various market-linked securities like Bonds, equities, and more. But the risk factors vary across different mutual fund categories.
You can also manage the risks associated with mutual funds through an appropriate asset allocation strategy. This will track the market fluctuation as well.
Mutual funds involve an extensive range of schemes that ensures there is something to offer all types of investors. You can also decide the route of your investment which is SIP or lumpsum according to your circumstances.
Additionally, if you fall into the taxable bracket, there are some tax-saving mutual funds in the form of ELSS that will help you to achieve twin goals such as wealth creation and tax saving.
3. Not investing because of not having enough money:
If you think you don’t earn enough money to invest or you don’t have enough money to start investment-these two believing is a big mistake.
Most people do so, if you are someone who falls in this category then just pause and rewind a bit. You need to remember the last time when you checked the features, and processes to invest in any kind of tools. Whether it is a PPF, mutual Fund, FD, or NPS.
have you checked the minimum option for those instruments? So, you must keep in mind that the best time to start your investment is today. You must overcome any idea or thought that stops you from making an investment right away.
You should check for the lowest investment option of the tools and focus on starting your investment with the lowest amount that you can afford.
4. Comparing yourself to others:
It is easier to look at what other people are doing and you can feel defeated if you can’t reach the same level. But investing is personal.
No other person has a job, family, circumstances, income, expenses, personal responsibilities, or other factors as you have. All of these factors have a significant role in how your investment will perform.
The biggest mistake is comparing others’ investment returns with your investment return and trying to attain the same return without knowing the surrounding information.
According to Kevin Matthews, ” There are a lot of factors that determine how much you can make in the stock market, including when you start investing, how long you hold, and the amount you start with”.
5. Having unclear investing goals:
You must have a set of clear goals when you start investing. Most people focus on making more money instead people must see money as a tool that is essential to meet their other goals. Imaging investing all about return is another mistake that investors often approach.
You must not go forward with high returns as these come with high-riskier investment plans, rather you should look for less-riskier investments that adequately meet your goals.
You must always go forward with proper financial planning. You must keep in mind that there are no short-term rewards Also, first-time investors often treat the stock market as a gamble.
If you don’t have any proper financial goal while starting to invest, there is more chance to end with greater losses. It can turn you into a reckless investor too.
The best way is to take some time to make an investment plan before investing. You must identify your goals and pick some strategies to achieve these goals.
You need to research the company that you are planning to invest in and make an informed decision.
FAQ:
What are the mistakes that Investors make?
Ans: There are some common mistakes that are approached by investors including active trading, market timing, misunderstanding performance, working with the wrong investment advisor, starting investing without a goal, and so on.
What is the biggest investing mistake?
Ans: There are various investment mistakes done by investors and it leads to major financial losses. So, while investing you must be very careful about these few facts such as not having the proper idea of investment, lack of patience, too much investment turnover, attempting to time the market, and failing to diversify.
What are 4 examples of investment?
Ans: There are various types of investments that you can choose according to your preference. The very common investments are bonds, stocks, real estate, and ETFs or mutual funds. Some other types of investments are cryptocurrency, commodities, precious metals, and collectables.
What are the most common mistakes of investing approached by first-time investors?
Ans: Fear of missing out, chasing performance, and focusing on the negatives are the three common mistakes approached by first-time investors.
Conclusion:
Mistakes are a part of the investing process. You must acquire much knowledge about the investment type that you are going to approach. You also gather knowledge about the negative sides of the investment before proceeding ahead.
Here, in this article, I have put together 5 common investment planning mistakes that you might never know you were making.
To avoid these mistakes you must develop an effective, and systematic plan and stick to it. You can follow the guidelines that I have mentioned above and you can potentially develop a portfolio that will provide you a major happy returns over the long run.
