ENTREPRENEURSHIP / MAR. 29, 2014
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5 Investment Mistakes To Avoid

Making investments is the best way to make your money work for you. If you are earning more than enough money to live on, putting a part of your savings into investments will enable you to earn more money without your needing to do much work. It's something that all financial gurus recommend, and it is the best way to be prepared for a financially successful future.

Here are a few investing mistakes that you should take care to avoid:

Mistake #1: Worrying about day to day devaluations.

Let's say you buy stocks in a certain company, and those stocks are set to increase in value. However, when checking the stock value the day after buying them, you notice that the value has dropped. At this point, many people become fearful and cash out of their investment. Don't! Don't worry if the value of your stocks drop, especially if it's just a few points. Remember that the stock market goes up and down hundreds of times per day, and the most important thing is that your stock keeps rising over the course of weeks, months, and years.

Mistake #2: Worrying about current events.

If you're afraid that the problems in Europe or Africa are going to affect your stocks or investments, you may end up losing out on good opportunities to make money. According to financial guru Warren Buffett, the last thing you want in unstable situations is cash. Money always devaluates during times of instabilities, so invest in something that will increase in value no matter what happens in the world around you.

Mistake #3: Thinking you need to be an expert on trading and investing.

The truth is that you don't need to be an expert to see, "X company is going to increase in value over the next few years." You will find that the stock market has thousands of different investment opportunities, and all you need to know is whether the company you're investing in will increase in value. Don't worry about becoming an expert, but look for an investment that looks certain to grow--even if it's slow growth.

Mistake #4: Trying to turn a quick profit.

If you're a total newbie to the world of investments and stock trading, it may be a good idea to let your money sit in a safe investment where there is a slow increase in value. If you try to turn a quick profit, you could end up losing a lot of money. Unless you're a stock broker, it's better for the average investor to go with the safe bet every time.

Mistake #5: Cashing out too soon.

If you really want to make big money off your investment, you'll need to put your money down for the long haul. We're talking 5, 10, 20, or 30 years sitting in CD or holding on to stocks that are slowly increasing in value. You'll receive a small annual return, but that return on your investment will build up over the years. By the time you do cash out, you'll have earned a good return on your investment.

Looking for a good CD?

  • GE Capital Bank offers a 2.20% APY on a 5-year CD
  • Barclays offers a 2.15% APY on a 5-year CD
  • State Farm offers a 2.05% APY on a 5-year CD
  • CIT Bank offers a 2% APY on a 5-year CD
  • American Bank offers a 1.10% APY on a 5-year CD.

No matter what you invest in--be it stocks, bonds, securities, real estate, or futures--you need to be smart with your investments. The tips above can help you avoid mistakes, thus ensuring that you receive a good return on your investment. 

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