Barely making any money from investments? Feeling that investing is not for you?

You probably made or still making one of these 5 investing mistakes!

The stock market is a playground for some and a maze for others. If you aren’t making any money or (worst) you have already lost a lot of money, then you might be a maze runner. Let’s see which are the 5 most common investing mistakes that you might be making right now.

1. Don’t listen to rumors.

The biggest investing mistake that beginner investors are making right now is getting influenced by finance “influencers”, social media, brokers, financial advisors or in general financial news broadcasters. The majority of people, who talk about specific stocks, have an agenda. They talk about it because they either want to influence people to buy it or sell it. So if you are making this investing mistake right now, just drop it. There are other ways to figure out if a stock is good or bad. You can start by reading books for beginner investors.

2. Trusting your gut is not enough. 

Another mistake that you are probably doing right now is just trusting your instinct when buying or selling. This is a No-No. Don’t get me wrong, sometimes trusting our intuition can save us, but here is not enough. Especially when the stock is screaming “DON’T BUY ME”. 

The golden rule here is just don’t buy any stocks that you heard in the news recently, or because you simply recognize the logo or like the ticker (the ticker is the Unique Identification Code for every stock i.e Salesforce’s Ticker is CRM – I don’t say that CRM is not a good stock…).

Invest in companies for a reason. A few reasons are: you understand the industry,  you research their financial position or you believe in their future application. Highly recommended to start with industries and companies you are familiar with. 

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3. Don’t put all your money into a single company.

Putting all the money in a single company is a big investing mistake that beginner investors making right now. The chance that you put all your money in super stock, at the right time at the right price, is 1 in a million. Unless you were a true believer in Elon Mask back in 2016-2019 and by then you’re already a millionaire.

But, let’s be realistic. Putting all your money in one stock is pure gambling not investing. Companies like Tesla or Apple are once every 30 years and the ones who actually invest early in those companies are investing in one million other companies in order to come out winning in just one. So this can be a mistake that you are making right now! So don’t invest in just one company is wise!

4. Never buy when the stock goes up.

A huge mistake that investors keep making is to put money in a stock that is skyrocketing and hoping that will keep going up!

Investor looking at his screen

Let’s go by the phrase “What goes up must come down”. Nobody wants to purchase an overvalued stock that will require a longer time to pay you off. Now, you may wonder how I know if the stock reached a peak? Well, you don’t know, because nobody knows.

However, there are many ways to identify if a stock is overvalued. For instance, you can use metrics such as PE ratio, Cash Flow return, Book/price, conduct a SWOT analysis, check the company’s recent investments, compare the industry average and competitors, and many more. These tools will help you divert you from making mistakes when buying or selling a stock. 

5. Don’t put all your money in stocks. 

A balanced portfolio includes different sources of investments such as stocks, bonds, money in the bank (savings), real estate, collectibles, etc. A common investing mistake that you are (probably) making is investing in just a single source of investment. This will not give you full coverage and won’t provide diversification when bad times happen. You’re probably risking losing or reducing the value of your money. Think of it like nutrition, if you eat only chicken or pasta, you will have a deficit in some important nutrients that could make your body healthier and stronger. 

Investing can be fun but needs time and effort. Learn how to get started with your investing journey or take a look at this book list for beginner investors. 

Hope this article helped you to identify any investing mistakes you are making right now. If you have spotted some of your habits above, then it’s time to create your mitigation plan. Yes, investing can be profitable and you can generate money, you just need to work smart, not hard!