Not knowing your investor profile and wanting quick results are some of the most common mistakes. Learn how to avoid them
Check out the 10 main mistakes below and learn how to avoid them.
1. Not knowing the investor profile
One of the most common mistakes made by beginner investors is not knowing what their investment profile is. A person may consider themselves more moderate or more risk-taking, but when the first loss comes, they get scared and want to review their investments. If they withdraw their money before the deadline, they may lose out on a scenario that could stabilize in the future.
To avoid this mistake, you need to be critical in your self-analysis to know your investor profile, carefully considering whether the higher return can compensate for the headache of a loss of equity if the investment does not achieve the expected appreciation.
2. Not knowing the investments
Those who are just starting to invest can get confused with so many options and nomenclatures. There are acronyms and concepts that need to be learned , such as the characteristics and differences between fixed and variable income investments, what liquidity, grace period, maturity are, when an investment is protected from inflation or not, and which investment combinations can bring greater security to the portfolio as a whole.
In addition to studying the available investments and counting on the help of a professional to make the investments, it is possible to look for free financial education courses that will provide a greater knowledge base so that you can make decisions based on qualified information. Several platforms have texts and videos, some in class format, and can be found on websites.
3. Not considering investment deadlines
An important characteristic of investments is the term attached to each asset. The term is when the investment will mature and the return will be credited to the investor’s account. Here, the mistake may lie in the search for greater profitability: the longer the term, the greater the return.
The tip is to pay attention to the investment period and analyze whether it will be possible to keep that resource invested for the necessary time.
4. Not having a financial diagnosis
When starting to invest, it is essential to stop and analyze what the sources of income of that person or family are, what the main expenses are and how much can be directed towards the investment objectives – and for how long.
Knowing your financial situation and estimating how long it will remain stable are important tips for starting to invest, because time can dictate investments according to each person’s deadlines. This is essential to avoid early withdrawals.
5. Not having an emergency fund
The emergency reserve is a resource intended for cases that are not foreseen, such as health expenses, loss of income caused by unemployment or moving to another area, among other points.
It is essential for those who are starting to invest because it will prevent the investor from withdrawing resources from their assets whenever an unforeseen event occurs.
The suggestion is to set aside a sum corresponding to the amount that covers the monthly expenses for six months or a year. This amount can be in a daily liquidity investment, that is, something that can be recovered on the same day, without having to wait for compensation.
6. Not diversifying
Diversification means investing in different asset classes with the aim of protecting your assets. Thus, if one investment is not performing well due to a specific economic context, another will remain stable or profitable, as it is not affected by this influence.
Even within fixed income, there are different fluctuations for each investment. Knowing the options can be the key to maintaining balance. “Diversifying without understanding the assets can be as risky as not diversifying at all,”
7. Not being consistent
Investing a little bit every month can guarantee the extra income that beginner investors have always dreamed of. It is not necessary to have large sums of money to start investing. The CEO states that, in many cases, it is better to invest regularly, even in small amounts, than to invest large sums sporadically.
This way, the investor will be able to invest in assets that are performing well at different times, instead of placing all their chips on choices made based on sporadic analyses.
8. Wanting a quick return
Investing requires balance, calmness and a lot of market information to be able to allocate assets in assets that will bring returns. When a beginner investor enters the market wanting a quick return, he may end up in trouble.
The mistake is to make disproportionate allocations to high-risk assets in search of quick gains. The variable income market follows less predictable paths and investors can lose resources if they do not know where they are investing.
9. Not having a strategy
Making random investments that are not aligned with financial goals are common mistakes among beginner investors. To avoid this, it is necessary to have an investment strategy to achieve the individual goals of each individual’s financial planning.
Here are some recommendations:
- Identify dreams and goals: Making a list of everything you want can make it easier to clearly define your dreams, the deadline for achieving them and how much you can save for each one.
- Knowing short, medium and long-term investments: This helps you choose financial products that are suitable for each time horizon.
- Monitor the country’s economy: It is important to understand interest rate variations and choose financial products that are appropriate for each objective.
10. Letting yourself be influenced by the market
It is important for investors to follow economic news around the world, but that does not mean they need to change their investments every time the stock market goes up and down.