Why do you invest? Are you looking for a get-rich-quick investment scheme? Or, are you looking to build real, sustainable wealth that will last over the long haul? Most investors want to build wealth over many years. Sure, no one is going to turn down a sudden booming stock. But the reality is most successful investors find the right stocks to purchase and then have the patience to see them become winners.
Mistakes Can Be Costly
However, not everyone wins on the market. Many investors have trouble building their wealth. In most cases, they are making too many investment mistakes. In fact, there are numerous common mistakes that many investors make that prevent them from increasing their gains. So what mistakes should you be watching out for? Of course, there are no sure things when it comes to investing. But if you make too many avoidable mistakes they’re going to cost you. So, if you want to build real wealth, then avoid these common flubs.
Invest Based on Your Emotions –
this can be a tough one. But basing your investment decisions on you heart is very risky. The market is up and down. Overreacting to a big jump or fall could end up costing you big-time down the road. Don’t get caught up in your emotions. Instead, stay the course.
Trying to Be a Part-Time Investor –
some investors make the mistake of trying to sporadically invest. Rather than invest on a whim, or occasionally, when you get around to it, develop an investment plan. Then stick to it. You should be actively involved in your portfolio and stay consistent.
Misunderstanding Capital Gains Taxes –
one of the biggest mistakes many investors make is failing to understand the tax implications. When you sell a stock and make a profit, you owe money on the amount you gained from the original purchase. Likewise, if you lose money, you can deduct those losses from your income. It’s also important to understand how your investments will affect your taxes in retirement. It’s always a good idea to meet with an accountant or financial advisor to ensure you fully understand all the tax implications, now and in the future.
Trying to Time the Market –
everyone wants to get into the market at just the right time, and then get out before it goes downhill. But the market is often unpredictable. If you have money to invest, then get in while you still have it. Don’t try to time the market. Instead get in and then be patience for the returns to come.
Putting All Your Eggs in One Basket –
while not all stocks are winners, it’s a good idea to have your money in several companies at once. By diversifying your portfolio, you stand a better chance of having success. The winners can help overcome the losers. If you invest in just one or two stocks, you stand to lose everything if things go south.
Losing Sight of Your Long-Term Goal –
always stick to your long-term goals. The stock market is a marathon, not a sprint. So avoid overreacting to the highs and lows and be prepared to wait things out. Over the long haul, most investments eventually pay off.
The post These Investing Mistakes Prevent You From Building Your Wealth first appeared on Advisors to the Ultra-Affluent – Groco.