5 Warning Signs for Your Investments
5 Warning Signs That You Don’t Know What You’re Doing With Your Investments
For those looking retirement dead in the eye, an investment mistake or two can be quite lethal. However, for those whose retirement is rather far off in the future, making an investment mistake here or there doesn’t have to be the end of one’s financial world.
That being said, those in their 20’s and 30’s should not take a haphazard approach to investing. Just as an employer is apt today to use a background check to make sure they are hiring the right employee for the job, getting off to a good start and building a solid investment portfolio over time is a great means by which to secure one’s financial future.
If you are in your earlier working years and wondering about some of the mistakes that can lead to many sleepless nights, they are actually more common than you may think. In fact, some are downright easy to avoid, so always look for such trouble.
Warning signs of bad investing include:
1. Carefree attitude – While your lackadaisical attitude may get you by on a number of fronts, having such feelings towards your investments is never a good idea. One of the biggest things to avoid is being over-confident in your investment aspirations. As many people have seen during the wild rollercoaster ride of recent months with stocks, pretty much anything can and will happen. It is important to always have a clear head when making investments, which will allow you to avoid carelessness, something that can doom your financial success.
2. Not enough diversity – Another mistake that especially younger investors can end up making is not having enough stock diversity. Even the most skilled stock market expert can get them wrong at times, so you certainly have the potential to mess things up with your selections. The goal at the end of the day should always be to spread your investment vehicles across a swath of investment tools that include stocks, mutual funds, bonds, annuities, and more. When one market may be floundering or barely staying even, another can be taking off, meaning you need diversity in order to succeed where you might otherwise fail.
3. Staying put with losing performers – One of the golden rules of playing the stock market is never panicking when things seem to be heading south. Yes, to panic is not a good thing, but that does not mean you should stay put with losing investments for an endless amount of time. If you are not consulting with and working through an investment adviser, by all means educate yourself as much as possible on the way the game is played. Investments will go up and down over time–it is part of the game. What should not be part of your game is staying put with a bad investment that continues to drain your funds.
4. Not taking an interest in your investments – Given the hectic pace of today’s society, it is very easy for investors, especially younger ones, to lose track of their investments. It is never a bad idea for young investors especially to educate themselves on how investments work, be they in an IRA, 401k, or other such portfolio. Since many people enter investing with little or no knowledge of how the game is played, it is wise to take some courses, follow investing sites and business news outlets on the Internet, and stay in regular contact with your financial adviser. Always remember that they are there to serve you, so never hesitate to ask questions. The choices you make today will determine how you are decades from now.
5. Not looking at the long-term goal – While many investors would love to hit the “do-over” switch on their investments decades from now, much of the blame in such cases can be placed on two things. First, they got started too late with investing. Secondly, they did not educate themselves enough when it comes to balancing their money and when and how to properly invest it. One of the big dangers always thinking of the short-term. The truth remains that many investments need time to grow, especially for those in their earlier years that may be funding long-term goals like a college education for their children.
Whether it is stocks, annuities, or other investments that you are currently managing or plan to manage down the road, always look out for mistakes and errors that could end up proving bad investments over time.