When it comes to investing, there are lots of misconceptions found in print, online, and in the media. Usually, it conjures up images of people getting rich through quick schemes, or the ability to earn millions in stocks. Yet the reality is that investing is hard. It takes time and patience and even then, people may not reap the rewards they expect. Below, we attempt to cut through the noise and provide three things everyone gets wrong about investing.
Not Understanding Investments
When you invest in something you don’t understand, you are taking a gamble. If you don’t know the business model or industry, you have no idea of how that stock will fare. This means you probably won’t get the best return.
There are two solutions to this. The first is to invest in industries and sectors you know well. By doing this you have more control and are in touch with any changes.
Trading on the Wrong Platforms
Using mobile technology, it is now easier than ever to begin trading. Yet not all platforms are created equal. You may find some are slow to implement transactions, others may charge high fees, or they just may not provide the access to different stocks and markets you need.
In these instances, it pays to do your research. Make sure you think about the type of investment service or trading platform you want to use. Do you want a lot of control, or would you prefer someone to do most of the work for you? What fees are you willing to pay? How much would you invest each year?
There are lots of honest reviews online you can use to assist. Investing Reviews is a site that UK customers can use, for example. They look at everything you need from platforms, such as fees, products, deposits, and withdrawals along with even more features. This review of Hargreaves Lansdown shows their thorough approach to finding the best platforms on the market.
Investing is a long-term game. The longer you hold onto the investment, the more likely you are to get a bigger return. It is only day traders who invest then jump out quickly, and even they lose a lot of money more often than you would think.
When people need money to grow this quickly, it is also a sign that they probably don’t have enough in savings. Make sure you have cash reserves in the bank before risking them on investments. This also feeds into another mistake, which is investing money you may soon need.
All investment is a risk with high levels of volatility. You don’t want to risk it all, especially if you need money for a big occasion like property deposits or a wedding. Don’t look at investing as a get-rich-quick scheme, but something that will mature.