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Mistakes made by investors

 

Written by R. A. Stewart

Everyone makes mistakes, it is a part of learning. Those who claim to have never made any mistakes are living in self-deception. As far as money and investing is concerned, learning how to invest according to your goals and personal circumstances requires experience and that will be accompanied by mistakes along the way. As they say, “Experience is your best teacher.”

Here are some of the most common mistakes made by investors.

  1. Investing too conservatively

Investing too conservatively will leave you short-changed in the long run if there are decades between you and retirement. Long-term investors who are too conservative are leaving thousands of dollars on the table. This does not mean that you should be reckless and invest your life savings in something risky but invest for growth.

  1. Investing in the wrong fund.

If you have a retirement fund or mutual funds then investing according to your goals is important. If you have a rainy day account this should be invested in something safe such as with a high street bank because the money is available as needed and the last thing you want is to invest your rainy day fund in something volatile such as shares and  just when you need the money your balance has gone down and you will have less money in your account than you thought you had.

 

  1. Not diversifying

Placing all of your eggs in one basket is just asking for trouble. You don’t know what is going to happen in the future. Investing your money in several places will cushion you from the effects of a downturn in the economy because not all industries are affected in the same way. 

  1. Unwillingness to get financially educated

Ignorance can be very costly. If you are not even willing to learn how to manage your own money and investing then you have only yourself to blame if you end up in need. There is only one person who can change your situation and that is the person you see in the mirror.

  1. Lack of Planning

Not knowing where you are going will lead you to nowhere. Having goals for you and your finances gives your work and your life a purpose. It gives meaning to everything you do. It is the “Why” to everything you do.

Everyone has choices but these choices have consequences and it is up to you to make choices which are beneficial to you and your family if you have one. Taking responsibility for your choices and mistakes shows that you are a mature person. Immature people blame others for their mistakes and are quick to find a scapegoat for their misfortune.

About this article

This article is of the opinion and experience of the writer and is not financial advice.

You may use this article as content for your blog or ebook.

Read my other articles on www.robertastewart.com

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Personal Finance: Looking at the Big Picture

Personal Finance: Looking at the Big Picture

Written by R. A. Stewart

Financial planning requires vision. It is looking beyond your current needs and circumstances and making provisions for your future. A person who sets up his finances in a way that he or she knows where there is money is going and what it is being saved for is a mature and responsible person. Someone who spends all of their discretionary savings without any thought to the future is a selfish and immature individual. I say that because if they have not left anything in their estate and expect their family to pick up the tab when they have passed on, then that is selfish of them.

Joining a superannuation scheme in order to make provision for when you stop working is the sensible thing to do. It is also the responsible and mature thing to do. New Zealand, as do other countries have incentives for contributing to a retirement scheme. New Zealand’s scheme is called “Kiwisaver.” Unfortunately, the National government (in New Zealand) has watered down the incentives in order to balance the books, but it does not affect the make provision for your future principle. 

In New Zealand, withdrawals can be made from Kiwisaver for house deposit. There are restrictions on this such as one needs to have been contributing to Kiwisaver for at least three years. 

The benefits of saving money cannot be understated. If you want to purchase a car and you have no money saved whatsoever, you have two options: start saving or borrow. If you choose the second option then you are financially dumb because you are paying more for the car than the sensible saver who pays cash for it.

There are the costs of keeping the car on the road on top of what you have already borrowed for the car so if you were not able to save money before you had a car you will struggle to keep your head above water afterwards.

You may have your retirement scheme all sorted and have no intention of buying a car, but you will need a lot of money at some point, whether that be for getting married, having kids, a medical expense, or other emergency. The sensible thing to do is to be prepared for all of these.

If you enter a relationship with someone and they do not even have a penny to their name then that should serve as a massive red flag. Be aware that if as a couple you apply for a home loan then you will be turned down if one of you has a bad credit rating.

Whether you have any material goals or not, there will always come a time when you need money for something, whether that be for a bond for a flat, house repairs, medical bills, new car, and so on. The willingness to save your discretionary money for unforeseen expenses requires vision. It is the responsible thing to do. A person with no vision will spend everything they have without any thought for the future. 

Having an emergency fund is a good idea. One which is separate from your personal bank account. This will provide some kind of cushion from financial shocks which will occur from time to time.

It is all about looking at the big picture and how being a good manager of your money will make life a little less stressful later on.

About this article

The contents of this article are of the opinion and experience of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook.

Read my other articles on www.robertastewart.com

 

Explore Freely, Spend Wisely: The Ultimate Travel Companion

 

For the ultimate freedom to explore these incredible routes, get a Wise Travel Card. One card holds multiple currencies, letting you pay effortlessly in NZD for fuel, snacks, and accommodation. It automatically converts your money at the mid-market rate, saving you from costly bank fees. Top up and manage your funds instantly via the app, making it the smart, secure, and simple way to travel. Spend like a local and focus on the scenery, not the small print. Get yours and travel with ease.

https://wise.com/invite/dic/roberts10486