What are the most frequent errors that people make when investing?
I have found that the most frequent errors people make when investing are they are ruled by their investing emotions. Investing Emotions are greed and panic. When times are good, investors are throwing money into investments that are "hot". This is an instance when greed rules. When times are bad, investors pull their money out of everything. This is the time when panic rules.
Investors have to realize that investing comes with risks and the only way to manage risk is though a diversified portfolio that is appropriate to their goals, time frame, and level of risk.
Where there is CONTENT, soon there is confidence, and this commonly brings in all the "snake oil: salesman, and people do NOT clearly differentiate between the two.
They do not seek a professional and instead go with somebody who is not an expert in the area where they wish to purchase.
Lack of education. They go in to the markets and they have no idea what is going on.
Get educated!! That's what people lack and no body can make you a millionaire over night so quit believing in all that crap out there and be reasonable.
Do your research and understand how the markets work. If you understand the markets and you are educated about them people can not con you out of your hard earned cash either.
I think where people make most of their mistakes is either by not listening to their own gut instincts or by paying to much attention on fear factors. These mistakes can prove to be very costly and a good investor always listens to their own instincts and filter out nonsense.
Their Emotions and inexperience keep them in losing trades too long and they get out of winning trades too soon. Again, it takes more than just a method to trade successfully.
Sell low and buy high. Changing goals - within one investment.
The most frequent errors that people make when they are investing are to let emotions rule over logic and to be inpatient. It is very hard to separate emotion from investing and many times an investor will make a foolish mistake because they use emotion and not logic to make a decision. I like to tell all my investors need to be like Mr. Spock and not Dr. McCoy.
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