I don’t think none of my readers can claim that they have zero investment experience. If you forgot about a bank account you had for a couple of years only to realize that interest has accumulated in your account, you made an investment!  Of course, a saving account might not be the best way to invest your money, but it certainly counts as a form of investment.

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Image Courtesy – UnimaxWorld.com

However, these kind of ‘investments’ doesn’t mean you understand what you’re doing. You may not know, for instance, the dangers of accounts with conditions. You might invest ten thousand in a savings account at an interest rate of 2.5 percent. That’s quite high for the current market. Now, if you have put your money in an account, it might have the condition that you can’t withdraw it for two years without losing your interest. If the market tanks, then that money could lose more value than it gains. This is one of the issues with investing your money. However, when it comes to investment issues, it’s really just the tip of the iceberg. There are a lot of other problems you must be aware of.

Bad Investments

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Image Courtesy – RoofingSalesMan.com

You need to understand that the market is full of bad investments. These will often be advertised as sure things, and you can’t trust these declarations. They are often just marketing ploys. An example might be a property investor. They might claim that they have an excellent property on the market right now, ready for you to invest in. It sounds great, and they might have give you the offer of buying at a lower price. But what do you really know about the company? What do you know about the property they are selling? If the answer is not a lot and nothing at all, you might want to reconsider.

Similarly, you may think you have found a great company to invest in. It’s up and coming and it’s being advertised as the next Microsoft. You can even invest with penny stocks making it a cheap and affordable investment choice. However, there is no guarantee that company is going to hit it big. If it never gets off the ground, you could lose anything you put into that company. Of course, if it’s a penny stock that’s going to be a small amount. But you still want to avoid wasting your time with poor investments that are never going to lead anywhere.

You need to know how to recognise a bad investment. If they are offering limited information about don’t have a clear plan, don’t invest. If you don’t think you can trust the company offering the investment, don’t invest. Then again, there is another way that you can know for sure whether you’re making a smart investment decision.

No Advice

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Image Courtesy – Advicemarket.com

If you’re investing your money, you don’t need advice from experts, right? That’s just crazy, particularly when your next door neighbour has told you it’s a sure thing. They’ve already invested so it must be a great opportunity? You should never just trust one person’s word about an investment or even your own judgement. You need to speak to someone who knows the market and can help you understand.

Businesses such as Rod Thomas Investment can help you understand this choice and make an informed decision. You can think of investment advisors as your safety net. You’re still walking a tightrope but you know if you do fall to the ground, it won’t be a disaster. You’ll bounce, you’ll recover, and you can try again. There are too many people on the market right now making quick decisions about investments. They need to spend more time thinking about it, asking for professional opinions.

 

In particular, you may want to use the expertise of an investment broker. They will be able to help you choose the right investments based on the money you have to use. They’ll also make sure that you don’t fall for any of the bad deals we’ve talked about. Make sure that you do look at broker reviews online before you trust them with your financial decision.

No Knowledge

You should never invest in something that you have no knowledge of. You should always have a rough idea of what you’re doing and how it will affect your finances. As well as this, you need to understand the investment itself. For instance, if you are investing in shares you need to understand what will make that share rise and fall. For instance, you may have shares in BP. Recently, the Northern Oil Industry has hit a slump as oil reserves begin to run out. Therefore, BP shareholders should have sold before the stock reached the lowest point. Or, they should have waited for it to bounce back. This type of investment can seem like the look of the draw, but it’s not really. Smart shareholders research their stock every day and make sure they are ready to sell.

This is true with any investment. You need to think of it like running a business. You can’t run a company without some knowledge of how that particular industry works.

No Way Out

To succeed in investments, you need to take risks. But a risk is not the same as a gamble. If you are taking a risk, you have calculated the odds of success and failure. You might also have stabilised your risk with backup options. With a gamble, you’re all int to win or lose. This is the worst way to look at investments. You need to spread out your portfolio. Essentially, make sure that you don’t have too many eggs in one basket. One stumble and they will all crack. Property investment is a good example to consider here. You want to invest in a number of different buildings rather than just one. That way you can reduce your chance of a big loss that you won’t be able to recover from.

Avoid these pitfalls and you’ll be in a better position to ninety percent of other investors on the market.

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