Ep.6: Investment Mistakes

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Hello and welcome back to Money Matters where I help guide you in becoming a better more confident investor!

Life funny that in class you get lessons and then you take a test, where as in real financial world you get tested and then you learn a lesson, and often times a lesson that can disrupt for financial health and wellbeing. In this video I wanted to touch on some thoughts to help you stay on track in your investment journey and avoid mistakes that I have seen and made myself. And learning from these mistakes I think we can all benefit as we go forward. Some of these thoughts are my own, and some of these thoughts are borrowed from the best financial thinkers of our time. Going of a list, I will be touching on a few concepts that I feel warrants your attention and touch on that concept in just a little detail. 

The single most important is managing yourself! Manage your own behavior is more important than intellect. This is one of the nest reasons to work with a professional, if not anything to save you from yourself!

Knowing what you own and why you’re here investing in the first place. Set expectations as to what you want to get out of your relationship with the stock market. This way you’re less likely to make a foolish knee-jerk reaction when times get tough.

If you’re invested in the market, don’t focus on the market’s behavior more than your own! Instead of trying to predict and control what the market does, you should be controlling the things you actually can such as how much you earn, save, and spend. Do this in a tax efficient manner. Before you start investing, make sure your own financial affairs are in order before taking on more risk.

Watching the news and taking it as a truth. The news gets paid primarily through advertisements. They aren’t going to say hello investor, everything is going to be fine, simply stay the course and you’ll be rich! Please turn off the television and keep living your life! Ha it’s the exactly opposite, they are going to prey on your emotions and sell fear, one headline after another until something strikes a chord with you… and now you’re watching! Not only the blown way out of proportion news, but the ads too. They know exactly what they’re doing, don’t be fooled. Think before you act.

Stop trying to time the market! It’s not timing the market. It’s time in the market. The best and brightest in the world can’t seem to figure this out, so no offense, just because you’ve watched CNBC a few time, or read some article in Forbes magazine don’t start thinking that you can.

Don’t give too much weight to the present, especially if you’re investing for the long-term. Volatility can be hard to stomach, but if you’re looking to get at your money in 10, 20 plus years than this has nothing to do with you. Stay focused on the long-term!

Judging everything on being most affordable. Don’t get me wrong, cost I a huge piece of the investing puzzle you need to be cognizant of, but going to cheapest isn’t always going to be the best and often your returns suffer as a result.

When they say “it’s different this time”. Those are dangerous words. Again this goes back to paying too much attention to the news of the day and not enough attention to market history. Once people get their emotions involved it’s like they suffer from short-term amnesia based on some of the poor decisions I’ve seen.

Trying to make investing exciting. Investing isn’t supposed to be sexy. This isn’t gambling in Vegas with your buddies it’s a discipline process that takes year if not decades to see results. Just like investing don’t try and run a marathon in an hour – you’ll just end up quitting and sick around mile 4.

Being reactive – instead be proactive with knowing how much you’re investing, and what accounts you’re taking advantage of. Take action! Remember the easiest thing to do is nothing.

Taking on more risk than you can stomach. This is when really bad decisions can happen and destroy year and years of returns. Know your risk tolerance and come up with a plan to stick to.

Buying the fad of the day. Bitcoin. Weed Stock. And the next best thing Wall-street promises to get you rich on! Know what you own! And don’t chase companies because they popup on your Instagram feed promising to get you rich. If you don’t understand it, or someone can’t explain it to you, then don’t invest in it.

I hope this helps keep you on track with you investment career. Keep the emails coming with any questions you may have as I’m here to help!

As always thank you for giving your finances the attention that they deserve.