{"id":5906,"date":"2019-08-24T12:03:27","date_gmt":"2019-08-24T12:03:27","guid":{"rendered":"https:\/\/nebawealth.com\/?p=5906"},"modified":"2019-12-04T22:58:11","modified_gmt":"2019-12-04T22:58:11","slug":"7-investing-mistakes-people-make","status":"publish","type":"post","link":"https:\/\/nebawealth.com\/7-investing-mistakes-people-make\/","title":{"rendered":"7 Investing Mistakes People Make"},"content":{"rendered":"\n
Investing is risky and if you are not careful enough, it\u2019s easy to make mistakes that can cost you financially down the road. Even the most intelligent investors are guilty of making common investing mistakes.<\/h5>\n\n\n\n

But mistakes are also a learning experience. We have rounded up some of the biggest errors people make when it comes to investing, according to the experts, so that you don\u2019t have to learn it the hard way.<\/p>\n\n\n\n

1. Making decisions with your emotions<\/strong><\/h4>\n\n\n\n

Investing can get emotional\u2014 money can cloud choices with \u201cfear, greed, and nervousness,\u201d tempting investors to move their investments around, said Shelly-Ann Eweka, a certified financial planner.<\/p>\n\n\n\n

One of the best things you can do for your investments is leave them alone and focus on a long-term investment plan.<\/p>\n\n\n\n

\u201cAvoid impulsively selling an underperforming investment and stay the course with a diversified portfolio that is able to withstand inevitable short-term rises and dips in the market,\u201d Eweka said.<\/p>\n\n\n\n

2. Dipping into the market sporadically<\/strong><\/h4>\n\n\n\n

Lumpy investing is when an investor invests inconsistently \u2014 and doing so can be a mistake, according to Chris Hyzy, chief investment officer at Bank of America Global Wealth and Investment Management.<\/p>\n\n\n\n

\u201cYou get a small bonus check or something like that in the early part of the year, you immediately put it to work, and you stop,\u201d Hyzy told Business Insider. \u201cYou\u2019re not a consistent investor over the course of months and quarters and years, etc.\u201d<\/p>\n\n\n\n

Investing inconsistently can prevent one from taking advantage of dollar-cost averaging, in which one invests a fixed amount of money in the market on a regular schedule to reduce risks.<\/p>\n\n\n\n

3. Using cash<\/strong><\/h4>\n\n\n\n

Millennials in particular are guilty of this investing mistake. Business Insider\u2019s Akin Oyedele reported that millennials prefer to use cash investments to set aside money they don\u2019t plan to touch for at least a decade, according to a Bankrate.com<\/a> report.<\/p>\n\n\n\n

However, this is one of the worst ways to earn returns.<\/p>\n\n\n\n

\u201cFor investment horizons of longer than 10 years, the stock market is an entirely appropriate investment,\u201d Greg McBride, chief financial analyst for Bankrate.com, told Business Insider. \u201cCash is not, and especially if you\u2019re not seeking out the most competitive returns.\u201d<\/p>\n\n\n\n

4. Not knowing how taxes affect your returns<\/strong><\/h4>\n\n\n\n

Some investors don\u2019t realize taxes can affect your investments, before and during retirement.<\/p>\n\n\n\n

\u201cIf you are working and have many years until you need to access your money, your taxes and strategy are a lot different than when you are retired and pay taxes as you withdraw money from the returns generated within a workplace retirement plan such as a 403(b) or 401(k),\u201d wrote Eweka.<\/p>\n\n\n\n

She recommends consulting with a financial advisor or an accountant to create a retirement income plan with taxes in mind.<\/p>\n\n\n\n

5. Waiting for the \u201call-clear sign\u201d to time the market<\/strong><\/h4>\n\n\n\n

Hyzy describes the \u201call-clear sign\u201d as the moment you\u2019re finally comfortable financially \u2014 but there\u2019s an inherent problem with that thinking.<\/p>\n\n\n\n

\u201cYou\u2019re technically never at your highest level of comfort and usually, when you are, it\u2019s when things are overvalued,\u201d he said.<\/p>\n\n\n\n

Hyzy said that even a well-intentioned effort to enter the market at a \u201cgood\u201d time cannot work out, despite having expert insight and training, if your timing doesn\u2019t align with the market\u2019s timing. \u201cSo, don\u2019t time the market,\u201d he said.<\/p>\n\n\n\n

Timing the market is also known as selling high and buying low.<\/p>\n\n\n\n

\u201cIt has been shown time and again that trying to outsmart the collective wisdom of the millions of smart, well-informed people who trade in the market is very hard to do consistently, no matter who you are,\u201d Derek C. Hamilton, certified financial planner at Elser Financial Planning in Indianapolis, told US News & World report. \u201cDisciplined rebalancing keeps you away from that market-timing trap.\u201d<\/p>\n\n\n\n

Financial advisor Eric Roberge said it\u2019s not about timing the market, it\u2019s about time in the market \u2014 the longer your money is in the market, the more long-term growth it will have.<\/p>\n\n\n\n

6. Disembarking from your long-term plan<\/strong><\/h4>\n\n\n\n

Letting daily trends influence your portfolio moves can end up putting your returns in a worse place. According to Eweka, many studies found that investors who hold a S&P 500 Index Fund have better returns than those who buy and sell stocks themselves.<\/p>\n\n\n\n

\u201cIt is important to develop a long-term investment plan and stay the course in order to reach your financial goals,\u201d she wrote. \u201cThis plan should be designed to provide a clear roadmap for achieving a range of needs and goals, from paying monthly rent or mortgage and saving for college, to investing for retirement, during both up and down markets.\u201d<\/p>\n\n\n\n

7. Not diversifying your portfolio<\/strong><\/h4>\n\n\n\n

There\u2019s more to diversifying your portfolio than owning several stocks \u2014 it helps decrease risk if you spread investments \u201cacross different asset classes,\u201d wrote Kira Brech for US News & World Report.<\/p>\n\n\n\n

\u201cMany investors think of diversification as simply owning more stocks, but do not realize you must also consider asset allocation as well as how your investments move in relation to one another, which is known as correlation,\u201d Michelle Jones, vice president at Bryn Mawr Trust in Bryn Mawr, Pennsylvania, told Brech.<\/p>\n\n\n\n

If you would like a complimentary review\u00a0speak with an expert today<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Investing is risky and if you are not careful enough, it\u2019s easy to make mistakes that can cost you financially down the road. Even the most intelligent investors are guilty of making common investing mistakes. But mistakes are also a learning experience. We have rounded up some of the biggest errors people make when it comes […]<\/p>\n","protected":false},"author":3,"featured_media":6278,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"_links":{"self":[{"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/posts\/5906"}],"collection":[{"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/comments?post=5906"}],"version-history":[{"count":5,"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/posts\/5906\/revisions"}],"predecessor-version":[{"id":6314,"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/posts\/5906\/revisions\/6314"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/media\/6278"}],"wp:attachment":[{"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/media?parent=5906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/categories?post=5906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nebawealth.com\/wp-json\/wp\/v2\/tags?post=5906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}