Missteps are to be expected when taking up new endeavors- unfortunately, missteps involving money can have serious consequences.
When it’s time to start investing, watch out for these five common beginner’s mistakes, reports the Investopedia.
One is procrastinating. Markets move quickly.
An investor who discovers a hot prospect, but fails to act promptly, is likely to miss that opportunity.
New investors are especially prone to procrastination out of the fear they might make a mistake.
Two is speculating instead of investing.
Young investors have more time to recoup losses suffered in the market.
This often leads them to speculate on risky investments instead of sticking to sounder prospects.
It’s okay to take chances, but look for risks with greater upside potential over the long run.
Three is using too much leverage, which includes various financial instruments that help increase an investment’s return.
A large drop in an investment that’s increased due to leverage may be too much for even a young investor.
Four is not asking enough questions.
If a stock is trading at half of its perceived value, it’s up to the investor to ask why.
Many new investors make decisions without first analyzing all relevant information.
And five, not investing at all. Young people can benefit from their time-horizon, but many don’t.
Frequently, they’re more interested in what immediate fun their money can provide than thinking long-term about their eventual retirement, thus missing out on the prime years to build up savings.
The bottom line is that young investors should take advantage of their age.
Applying sound fundamentals, and avoiding common mistakes, can lead to a long and fruitful investing career.