By Jun Amparo
- Investing without defining your financial goals
One common mistakes of any investor is to unable to establish clear financial goals. Therefore, it’s good to figure out your purpose of investing from the start. Financial goals can be categorized into three: short-term, mid-term, and long-term financial goals.
- Investing without an emergency fund and protection
It is a common mistake to begin investing without an emergency fund and protection like the insurance. Whenever you make financial decisions such as investing in mutual funds and equities, remember that having an emergency fund and protection are contributing factors to the success of your investment journey.
- Failure to understand how to assess or manage risks
When I started investing in mutual funds, I was informed to answer the entire risk assessment questionnaire to identify whether I am aggressive, conservative, or in between. If you are into a business venture or any other forms of investments, you have to understand that you might lose a significant amount of money supposing you failed to manage the risk.
- Failure to diversify your investment portfolio
You should avoid putting all eggs in just one basket, instead put them in different types of assets – cash, bonds, stocks, real estate, etc.
- Engaged in investing you don’t fully understand
So, your close friend in high school has approached you to invest your money into a real estate business? What would be your response? If the business model is vague and he fails to explain how to gain potential return, simply learn how to say no. .
- Investing without a mentor or coach
A mentor ensures that you don’t have to repeat your mistakes over and over. He or she is an experienced and committed person to teach you the whole process of investing.
- Focusing on short-term investment only
While you can make money quickly with a short-term investment strategy, it can entail significantly higher risks. In addition to greater potential risk, there are other disadvantages to short-term investing.
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Jun Amparo is a personal finance advocate and founder of Richly Blessed Today. He is an OFW currently working as a counselor in an international school in Thailand.
