What are the don’ts when investing?

Here is the list of don’ts that will keep you on the right track during the journey of investing.

Who doesn’t want to have a financial freedom? Who doesn’t want to make smart investments? We all do, but making the initial step is a nail-biting move for many of us. We doubt where we should invest, how much we need to start with or whether we end up losing money.

At its core, investing is not complicated. Most of the time, people make mistakes when are driven by emotions, greed, speculation or bad advice from others. Investing is really important in order to reach your long-term financial goals; simply keeping your money in the savings account will decrease its value over time because of inflation. Taking control early will help you develop skills that are essential for being on top of your finances.

Here are few tips you might find useful:

1. Start early. Investing early will teach you to spend less and save more. Additionally, you’ll enjoy the benefits of compounded interest. It’s basically the interest earned on interest.

2. If you invest, do it long term. Short term investing is considered speculative.

3. Diversify. Don’t put all your money in one basket. If you put money in one company, the earnings or losses will solely depend on that company’s performance. Put money in different companies; it decreases the risk of losing those investments. One good way is to invest in ETFs (portfolios that consist of stocks of various companies bundled together). So when you buy a share of ETF, you own a tiny piece of hundreds or thousands of companies.

Here is the list of don’ts that will keep you on the right track during the journey of investing:

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- Don’t lose your hard earned money

- Don’t invest on impulse

- Don’t invest in something you don’t understand

- Don’t rely on luck or gamble with investments

- Don’t buy at the top and sell at the bottom

- Don’t get attached to investments that performed well in the past and are no longer performing well

- Don’t pay attention to the media about successful investments, hot investments or bad investments

- Don’t buy shares of a company unless you don’t feel like you would buy the entire company

- Don’t invest in penny stocks as they are known to be very risky

- Don’t panic by short-term ups and downs because investing is meant to be long-term

By Rashid Khasanov

Photographs by Giphy.

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