The Finance Blogger


Biggest financial Mistakes – A Bad Investment

Biggest financial Mistakes We are doing a series on the biggest financial mistakes that consumers make over their lifetimes. This post is about bad investments that we all make from time to time. Some are very difficult to avoid. We may have done all of our homework, investigated whatever it is we are investing in and then made the plunge only to find out that the information we had, was not accurate or some of the assumptions did not turn out the way we thought they would.

Even the pros make these bad financial mistakes from time to time and make bad investments. The question is how to increase the odds of preventing these mistakes. You probably cannot totally eliminate the chances of finding out that an investment you have made has turned bad, but you can increase the odds of not finding yourself in a situation with a bad investment.

Biggest financial Mistakes

Avoiding Bad Investments

Leave your emotions out of the decision making process. It may be excitement or it may be greed, either way these emotions will never allow you to make an informed unbiased decision regarding your investment.

Talk to other people who are not emotionally involved and ask for their opinion. It should be someone you trust and it should be someone you respect for their smarts and common sense. Listen carefully to the pros and cons of what they have to say about the investment.

Taking risk is the cornerstone of many people who have gotten rich. But taking risk and taking educated risks are two different things altogether. You will never be able to predict a sure thing, but at least if you evaluate all of the risks then you will be able to make an educated decision.

Never place all of your savings in one investment. Spread it around. If an investment does go bad, then at least you have not lost everything. Investment advisers will call this diversity in your investment portfolio and this is a really smart thing to do.

Invest commensurate with your age. If you are young, you have lots of time to make up for mistakes and losses. If you are near retirement, you probably want to invest in relatively secure investments that pay a reasonable return. Taking high risk investments and investing your life savings in them, really puts your entire life and quality of life at risk.

Summary – Avoiding Bad Investments

One of the best pieces of advice that the writer every received was to review and investment and then walk away for 24 hours. This gives time to think about it, to allow the emotions to settle down and to avoid the pressure that a sales person might be trying to place on you to make a decision. Use your head and not your emotions to avoid making bad investments.

For more details about investing, click here.

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