Errors in Investing

Investing is not an activity for the faint of heart, nor is it something that guarantees success. No matter how well prepared you think you are to get into the market and invest, there are always potential pitfalls on the road to financial freedom. Investors make errors in investing all the time, even those who have some experience in the markets. The smartest way to avoid some of these investment errors is to enlist the help of a qualified local financial advisor.

Financial Advisors are Investment Experts

A financial advisor is a personal and/or business finance expert who works to help consumers avoid some of these pitfalls and make wise choices with their money. For example, most all of us have some money wrapped up in a retirement fund of some kind; but very few of us are comfortable or knowledgeable enough to take on the challenge of putting together a retirement strategy all on our own. For many investors, the extent of our knowledge in all honesty is the performance of our own IRA or 401k over the past quarter; and we only know that much because we get a prospectus mailed to us every so often.

Without a financial expert guiding the way, difficult financial choices become even harder to deal with. Personal finance is a balancing act: as a consumer, you have to give yourself enough capital to live on; but as an investor, you want to put away as much as you can for the long term. Navigating that balance is tough. This is one way many of us slip up if we do not heed the advice of a financial advisor. You might get a little too overzealous in your retirement savings objectives and not leave enough money to live on, jeopardizing your credit rating and your ability to deal with present obligations.

Examples of Common Investment Errors

There are all kinds of mistakes people make in their investing behaviors. Without the aid of an advisor, the frequency and severity of these errors are magnified greatly. Retirement and educational savings funding might be done with only a short term outlook, and savings products with great long range tax benefits could be overlooked. Having short term tunnel vision with these investments is a tough tendency to get out of. It's easy to get caught up in the enthusiasm of immediate growth and the short range performance of an investment vehicle. But it is always important to also be mindful of the ultimate purpose of these financial products. For a 30 year old, short term income is not the objective of a Roth IRA or even a college education fund for your kids. The long range performance of the funds is what matters.

Failure to create a specific objective when you put together a portfolio is a common error. Just haphazardly choosing funds to get into without a clear purpose can get you in some trouble. Think about what would happen if you placed all your trust (and investment capital) in mutual funds, and the mutual fund market took a dive. Without a clear objective, you were unprepared for this situation. Without thinking ahead, you would be unprepared for this emergency.

Common Financial Investment Errors

Some investors mistakenly think they can predict the lows and highs of the markets. They pull out of investments early to cash in on profits only to find that the stocks hadn't yet peaked in value; or they fail to cut their losses with a losing investment. The assistance of a financial advisor can help you avoid these issues.

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