Newbie Investment Mistakes in a Post-Pandemic Market
Learning how to be an investor was never easy to do even before the pandemic struck. Most people think they understand investing because of pop-culture TV shows and movies – or because they believe in talking-head experts they see on the news.
However, the fact is that most Americans don’t understand basic investment principles or how to do it efficiently. 92% of Americans don’t understand bond investing, or fixed income investing, which is one of the more straightforward investment methods.
I don’t proclaim that investing is easy. I am only saying that you should consult a good financial advisor or experienced investor who is willing to show you the ropes before you start yourself.
Here are some tips to help you avoid making serious investment mistakes as a beginner in a post–pandemic financial market.
Start an Emergency Fund
Investment is a long-term financial strategy that requires research, contingency, patience, and constant appraising of current market conditions. It takes time to learn what you are doing when it comes to investing, so you should start slowly.
If you make rash investment decisions or treat it like a get-rich-quick scheme, then you could lose all your money in an instant.
And the hardest thing to do with investments, especially if you’re on a fixed income, is to leave them alone.
In this pandemic-wrecked economy, you may be tempted to dip into your investments to pay for emergency expenses. But if you do that often, you risk incurring withdrawal penalties and fees. Also, you will sabotage your long-term investment strategies.
So, have an emergency fund on standby to deal with emergency expenses so your investments have time to mature.
Leave Emotions out of it
Every investment decision you make must be based on research, market conditions, the anticipated rate of returns, and other calculated and quantifiable metrics.
Never make investment decisions based on panic and emotion. Making investment moves based on emotional reactions could cause you to lose all of your money. Or you could sell too quickly and erase any potential of inflated profit.
Buying low and selling high become meaningless maxims if your investment strategies are purely based on panicked decision-making. Rely on research, strategy, and market conditions when investing – leave your emotions out of it.
Set Investment Goals
How long do you plan to invest in a stock or company? Are there other investment vehicles you would consider? What is your realistic but estimated return on investment?
Make investment goals before investing and a roadmap to meet those goals.
Practice with Investment Simulator Apps
There are many websites and brokers who will let you practice stock trades on investment simulators with “mock stocks.”
You can use investment simulators to gain some experience making investment moves without losing real money. You can also download free or cheap investment simulators on Google Play or the Apple Store.
You Don’t Need a Lot of Money to Start Investing
It will take time to start investing in a professional manner where you are spending hundreds or thousands of dollars on dozens of shares. It takes time to get to that level.
You can start investing with penny or spare change apps.
Or you can find investment opportunities where you can invest a little money while making an appreciable return on investment.
SMBX is an investment bond facilitation marketplace that matches investors with fundraising small businesses. You can invest anywhere between $10 to $2,500 through SMBX and get a return ranging between 4% to 9%.
Get a Financial Advisor
You need an instructor and guidance when learning to drive or fly a plane. So, you should have a financial advisor when learning how to invest,
It isn’t mandatory you get a financial advisor – but it may be easier to learn from the experiences of a professional than to lose money making mistakes on your own.
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.