Investing isn’t the happiest word these days. Like I mentioned last week, it’s hard to stay positive when looking at your 401(k) right now. But it’s still important to invest (buy low!). And if you’re young, now is the time to get a jump on the future and start taking advantage of compounding interest. (MAKE IT A HABIT!) Here are three investment mistakes you don’t want to make (I can’t WAIT to tell you)…
Waiting until you are debt free to start investing: Now this might depend on your definition of “debt free”. A mortgage is obviously a debt, but it’d be awfully dumb to pay off your home before you start investing. Now listen, paying off debt is IMPORTANT AF (AF= As Far as finances go), but it would also be smart to find a little wiggle room so you can spend some of that money on your future.
Not waiting long enough for an investment to grow: Smart investments aren’t going to make money overnight. If you want good returns, you need to wait as long as you can. Don’t bail because you didn’t triple your money in a month.
Waiting to break even on your losses: Ever heard of loss aversion? It’s “a phenomenon where a real or potential loss is perceived by individuals as psychologically or emotionally more severe than an equivalent gain.” Thanks, Investopedia. The truth is, we won’t always pick winners (Don’t believe me, ask my Uncle Sal* … you can find him at the dog races). If you hold on to a loser too long, it can really weigh you down. Sometimes you need to cut your losses and move on.
*I do not have an Uncle Sal