So, you landed a great job, paid off your pressing debts, and now you have some spare cash to start investing. What’s Next?
It’s time to start looking at taking the plunge into investing. Let’s face it; even your dream job will get old after a time. So, you need to develop a plan to save up some cash for emergencies, build up an investment portfolio, and creat some forms of passive income or side hustles.
Now if dipping your toes into the waters of investing sounds intimidating, don’t worry, we have a few tips to help you get started investing the smart way.
However, if unsure on the right steps to take when starting, there are many pitfalls and familiar trappings that are easy to fall victim to. To make sure you’re getting yourself off to the right start, here are three common mistakes made by first-time investors, all of which are undoubtedly important to keep in mind.
3 Common Mistakes Made by First-Time Investors
Putting All of Their Eggs in One Basket
Many investors stick to something they know at first, and while it’s certainly essential to invest in a strategy you feel knowledgeable on and interested in to start with, you shouldn’t necessarily hedge your bets all on one opportunity type. Most experts recommend diversifying your investment strategies, as it will in time give you an extensive portfolio that can sustain changes in the market, both in dips and surges.
If keeping to one investment type, your savings can often be in jeopardy if one of your investments were to go south and lose value. If you have a diverse portfolio as recommended, you will have other investments to fall back on should one of them not go the way that you predicted. Keeping emotional attachment to specific company stock or investment can also prove to be problematic, as it can sometimes cloud your judgment. Try to stay impartial if possible.
Property investment can be a good answer to some of the doubts and uncertainty brought into question by investors. A tactile and physical investment that sees you actually owning a given space or property, it would admittedly be a longer process if its value to drop, but you are never really at risk of losing what you own, and if you have the savings and capital for it not to affect you too much, you can weather the storm and wait for the property value to increase.
Not Seeking the Correct Information
Seeking out advice on the best ways to proceed with your investment or the most efficient ways to spend any capital, you might have is far from a sign of weakness. Investment companies that specialize in property investment, such as RW Invest, are happy to help with plenty of experience and expertise, no matter your varying amount of capital or the potential area you want to invest in.
Getting a second opinion on something is always a good idea in every walk of life, and with any investment, it can help to give you peace of mind that you’ve put your money in the right place. Going back to the point above about emotional attachment to a particular investment, it can also help you to garner reassurance from a second pair of eyes that you’ve made the right decision.
Not Having the Correct Amount of Capital Necessary
Investment opportunities can, without a doubt, be a rewarding way of earning extra income, but there are always risks involved. First-timers should consider the amount that they can comfortably afford to set aside on this project, as often investments (certainly when most lucrative) are long term, and once put in the money might not be accessible straight away in times of emergency.
Making an additional source of income shouldn’t be your priority if your initial salary is not enough to subsidize the immediate. Consider the capital you have available to play around with, and put necessities and family priorities first. You should always have a financial buffer available to help with things like car breakdowns, medical issues, or leaks and damages at home.
Develop a Plan
Before you pull the trigger on any investment, make sure you have a plan. Ask yourself “how the investment you considering fits into that you are considering fits into that overall plan?”
It can be tempting to want to purchase an investment because its “sexy” or your friends are all investing. However, your friends might be in different positions financially; in fact, some might not even be as in good financial standing as their boasting may suggest.