Which Common Mistakes Should You Avoid When Investing?

At Investown, we like to say that investing is for everyone there is no need to have millions in the account. But if something is needed, it is definitely getting at least a basic overview of how to minimize the risk of loss on investments. How to do that? Primarily by not repeating investment mistakes.

It doesn't matter if you value your finances only on Investown or own other assets, there are frequent misses repeat across the investment world.

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Investing in Emotions

Emotions are something that even more inexperienced investors routinely struggle with. Not to mention that emotional behavior is natural to us.

The problem is that if an investor does not temper his emotions in some situations, he can make an unfavorable decision under their whim — for example, he invests in a seemingly advantageous investment offer that later turns out to be fraudulent. Thankfully there are ways to tame emotions, they have proven themselves:

1. When you see an advantageous investment offer promising an excessively high valuation, it is not ideal to send money to it from minute to minute. It is better to close the computer, possibly find out as much detail as possible, and later return to the investment opportunity with a cool head.

2. Adhere to a long-term investment plan (more about this below in the article).

3. In case of uncertainty, discuss your decision-making with a professional, such as an investment advisor.

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Jumping on every current trend

“Now I have made a profit on a new cryptocurrency that will bring you hundreds of percent appreciation in just a few weeks. “

If you hear this or a similar phrase, it's probably time to take your feet to your shoulders. Investing in “trend” investments is one of the biggest missteps, especially for novice investors who want to get rich immediately. They are not very interested in the principles of investing — but this is not your case because you are reading this article.

The fact that your friend's investment last month brought a high return does not mean that you cannot lose money in it. This, by the way, is the advantage of investing with fixed income at Investown — from the first moment you know how much and when the opportunity will bring you.

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Impatience

Buy an investment today and sell tomorrow under the pressure of a changing market? This is mostly done by speculators on price, a long term investor should be patient and do not react abruptly to every current stimulus (for example, a temporary drop in the stock price, which can be profitable in the long run).

Patience also pays off when investing on Investown. When you put money into a project with a longer maturity (such as 48 months) and keep the investment for the duration, you will receive a fixed return month after month, even if other assets, such as stocks or cryptocurrencies, do not perform well.

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Non-compliance or absence of an investment strategy

It's never a good idea to start investing without clarifying your long-term goals and plans.

Someone will take the path of less risky investments because they need to save for retirement in the long term. Others, on the other hand, want to save on a car as soon as possible, so they choose a “faster” strategy. Either way, every investor should have a clear plan and adhere to it at all times, possibly adjust it with a balance sheet.

We write about the investment strategy in more detail in the article How to Start Investing as a Complete Newbie. It also contains a specific example from the life of a 23-year-old investor who needs to save as much money as possible for a mortgage.

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Zero diversification

Diversification Throughout the educational articles we mention regularly and we can not leave it out even in this text about the most common investment mistakes.

In order not to happen that one failed investment sinks the entire investment portfolio, it is advisable to spread your money into different assets. This is doubly true in a situation where you want to appreciate your finances even in riskier opportunities, such as hedges or stocks. The degree of diversification depends on the strategy of each investor.

Did you know that you can diversify twice as much at Investown? Firstly, by investing in tens or hundreds of different projects, secondly, by choosing investments with both short and long maturities (i.e. diversification in terms of project duration).

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This article is not financial or investment advice

Investown does not provide financial or investment advice. This is an informative article regarding common investment mistakes. For specific advice, we recommend using the services of a financial or investment advisor.

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