Hi friends, and welcome to 2023!
If for some reason, last year wasn’t quite your year. Let’s try and make this year the
year to beat! So, whatever dreams, goals, or aspirations you may have, get ready to achieve
them this year! If this sounds good to you, go ahead and hit that like & subscribe button!
Timing the market, knowing exactly the right time to buy and when to sale,
is kind of like having a superpower. But the thing is, most of watching this video are
never going to have this superpower, and if you hate me right now, I’m just calling it as it is.
Let me let you in on a little secret, - I don’t have this supper power either. So,
if you were feeling a little dejected, let me tell you the good news. Almost all investors,
including the suit and tie fellas who work on wall-street, don’t have this power, and the thing
is… you don’t need it either. You see, you’re never going to hit a bullseye every single shot,
you don’t have to, you just have to make fewer bad decision. I’ll explain this more later.
It's common knowledge that a lot of people struggle with investing and
especially finding the right place to grow money. And I don’t blame them because it
is actually not that easy to find good and safe investments with a good R.O.I.
So, even though the markets are always going to do their thing, going up and down like a
rollercoaster, investing and the stock-market is still the best way to beat inflation and
watch your savings grow. However, like the video title suggest, there are a few investing mistakes
that you should stay away from this year, and that’s what I’ll be talking about in this video.
1.Being impatient
Among investors, impatience is a common quality. This results in significant panic
as well as financial losses. Although patience is a quality that develops over time, it should be
exercised when investing. Don't make irrational decisions when comparing your losses to others'
gains. The stock market, according to Warren Buffet, is built to move money from the active
to the patient. Comparison breeds impatience, which can be financially disastrous. Keep your
composure and wait for your investment to grow. Therefore, practice patience when investing
especially in this year while bearing in mind the current state of the economy.
2.Trying to time the market
The adage "buy low and sell high" is the cornerstone of investing wisdom.
That advice is sometimes taken a little too literally by investors, which causes stress
and puts too much emphasis on trying to time the market. Instead of trying to buy the ideal
stocks at the perfect time when investing, think about making slow and steady progress,
which will put you in a better position you for retirement. Additionally, if you approach
investing with a long-term perspective, you'll be more likely to see results that are sustainable.
Invest gradually, paying more attention to long-term growth than to quick wealth. Day trading
has become an increasingly popular pastime. But many people struggle to determine when to leave
a hot stock. Many people who attempt to time the market are uninformed about a company's
fundamentals, including its business model and growth trajectory, and they simply tend to follow
a trend. The situation is more complex than just what a group is discussing on Reddit. A stock
or the market can be affected by a wide range of other factors. based on an interview with Dan Eye,
CFA, director of equity research and asset allocation at Fort Pitt Capital Group.
3. Failing to prepare a proper budget
Among its many advantages a budget helps you keep your eye on the prize. It ensure
that you don't spend money you don't have, it contributes to a happier retirement,
it helps you prepare for emergencies, and it sheds light on your bad spending habits. Simply put,
creating a budget is the process of determining how you want to manage your income and expenses.
As with any task, careful planning is necessary to prevent roadblocks along the way. Likewise, with
your financial situation. Making a budget does not require extensive knowledge of the technical
aspects of accounting. Simply make a note of your income and the amount you spend each month on
living expenses. Your savings are the remaining sum, which you can invest as you see fit. The
50/30/20 rule is the most practical formula for allocating your budget. In accordance with
this rule, you are permitted to spend 50% of your income on necessities like food and medical care.
You can use 30% of the remaining funds to satisfy your needs. For example,
you could upgrade your devices, go on a trip, or go out for a fancy dinner or movie. The most
important part is the final 20%. Set aside this sum to settle any outstanding debts,
and once the burden is lifted, you can continue to invest or save.
4. Panic selling
The pursuit of the hottest stocks and trying to time the market is frequently associated with
panic selling. When people are scared, they might sell off all of their shares of a certain stock at
once. The massive sell-off could lower stock prices, which frequently leads to more sales
and further depresses prices. Investors who panic sell frequently do so in an effort to
limit further losses. The price of the stock is, however, also driven even lower by panic selling.
Remain calm when the market is panicking. Stop reading the news and stop checking
your portfolios all the time. In order to get their opinion on the situation,
you may want to get in touch with your financial advisor if you're feeling
particularly anxious. Holding onto your stocks is frequently the best course of
action when it comes to long-term investing, especially when the market is highly volatile.
5. Failing to have a clear investment plan and goals
Your investment decisions become much clearer and more confident when you are certain of
your financial objectives. It assists you in better controlling and managing your finances,
enabling you to maintain readiness for the various stages of your life. Make sure you have specific
investment goals before you begin investing. Spend some time carefully planning your financial
objectives. Put them into three categories: - short, - mid, and long-term objectives.
For instance, planning for your retirement could be your long-term goal,
while purchasing a car could be your mid-term goal. Goals provide direction,
and investing helps make them a reality.
6. Taking on excessive risk as you get closer to retirement
It is never too early to begin making retirement plans. As soon as you start making money,
that is the ideal time to lay the groundwork for an investment plan that will yield the
highest returns when you retire. You have a greater capacity for risk at this age,
which also enables you to invest in volatile assets.
Also, starting early has the additional benefit of lower interest rates.
Your burden, overall expenses, and even your tax liability are decreased as a result. You
also get a longer time frame, which increases the returns on your investment. Nevertheless,
if you are older, don’t fret. Even though you might have more financial obligations right now,
it is better to start planning than to ignore them. Certain investments carry greater risk
than others. Riskier investments frequently yield higher returns. It can be tempting to
invest in high-risk but potentially high-return investments to make up for lost time if you're
close to the retirement age and haven't saved enough. You literally can't save yourself
into prosperity in a short amount of time. A good plan would be to put the majority of
your retirement fund into low-risk investments about five years before your desired retirement
date. If your financial situation is not where you would like it to be at that time,
consult a financial advisor to determine the best course of action for you.
7. Not learning your way through the stock market
You need to have a fundamental knowledge of the stock market's operations in order to invest in
it. More importantly, it would be helpful if you were informed about global events. It is
imperative that you keep up with the news every day because every choice you make,
no matter how big or small has an effect on the stock market. But not everyone has the
urge to trade every day in hopes of making quick money. You can always invest in reputable shares
that are expected to appreciate in value over time. The earlier you begin investing in stocks,
the more time you’ll have to reap rewards. To increase your wealth and properly learn
the stock market, make small monthly investments that compound over time.
8. Not safeguarding your life and assets with insurance
Insurance serves as a financial safety net to help you and your loved ones recover in the event of a
disaster, such as a fire, theft, legal action, or a car accident. When you purchase insurance,
you will receive an insurance policy, which is a contract that is legally enforceable between you
and your insurance company. Insurance needs to be a top priority. Whether it's insurance
for your assets or one for you and your family, having such security is a lifeline in the event
of any accidents. Your dependents, who you can designate as nominees, are covered. By submitting
a life insurance claim, you provide your family with the necessary financial protection in the
event of your passing. In addition to this, insurance has a lot of financial advantages.
In addition to the other benefits that come with it, it offers a source of funds in
case of accidents or medical emergencies, which lowers your overall tax liability.
9. Not meeting with a financial advisor
In this economic era, it’s best for you to have a financial advisor who’ll properly advise you on
the dos and don'ts. Holding your advisors to the highest standards is also crucial because your
retirement and insurance are both too important to take lightly. A financial advisor has a moral
and legal duty to suggest an investment strategy that is in your best interest,
especially one who acts in that capacity. As a result, when recommending an investment strategy,
your financial advisor will take into account your financial objectives. A
skilled professional can also assist you in overcoming the urge to panic or make rash
market decisions based on trends or "hot stocks." It may appear cost-effective to
avoid using an advisor because you won't have to pay management fees. However, in the long run,
we think the counsel you receive from a dependable fiduciary advisor is worthwhile. After all,
there are more benefits to working with a financial advisor than just investment planning.
10. Piling debt and putting off repayment
When you have a mortgage, a car payment,
credit card debt, and college loans, it might be difficult to know where to start. However,
ignoring the debt would not make it go away. Actually, it only serves to drag
you further into the mess of rising interest rates and dropping credit scores. Write down
all of your balances and the interest rates associated with them before you start your
debt repayment strategy. Prioritize those with high-interest rates since delaying them longer
will significantly increase the burden. If you struggle to keep up with too many loan payments,
think about debt consolidation. You will only have to concentrate on paying back the combined loan at
a single interest rate in this manner. And your overall cost of debt could decrease as a result.
11. Ignoring your credit score
Your history of debt management and repayment determines your credit score. In addition,
the total amount owed on your secured and unsecured loans as well as the number of
credit cards you have is taken into account. It serves as a gauge of your creditworthiness.
Before granting you any loan, banks and other financial institutions will consider your
credit score. For instance, the most popular credit score companies in the USA are Equifax,
Experian, and TransUnion. They have a range of 300 to 900, with 900 being the highest possible
score. A score of 750 is regarded as excellent. For seamless funding in case of emergencies,
you must maintain a score above 650. Everyone makes errors occasionally. The
issue arises, though, when you fail to take something away from them. Make your financial
plans early so that you can prepare for potential problems. Begin investing right away, but first,
create a plan and divide your financial goals into short, mid, and long-term goals. And
achieve balance by periodically reviewing your investments to reap the most rewards.
With that being said, all the best with your finances this year!
Thanks for watching, have a great day, and I’ll see you in the next one.