3 Ways to Avoid Making Poor Investment Decisions
When it comes to financial growth, investing can be a wonderful way of putting your money to work for you. However, there is always a risk with investing, which for some is the reason that they won’t invest their money in more than a high-interest savings account. While the concern is understandable, by using the right resources and doing some research into wise investments, taking the risk can have quite a healthy return in the long run.
Before deciding to invest, however, there are a few things that you should do and know in order to avoid making poor investment decisions and risking your financial future.
Never Make an Investment, or Purchase a Financial Product from Someone You Do Not Know is Qualified and Trust
There are tons of getting rich quick schemes out there, be it online, or in person, and the unfortunate reality is that every day hundreds of people make the poor decision to invest in them. Now, people do this for a number of reasons, everyone’s life and everyone’s finances are different, however, the one thing that everyone who invests in these has in common is that they end up further behind than they were in the first place.
When you decide to make an investment it is imperative that you are doing so with as much knowledge as possible. This is why so many people take the time to find and work with a steady financial advisor. Doing so allows you to form a relationship and some trust, allowing you to ask any questions that you might have, be open about any concerns and allows the financial advisor to see where your priorities are, and try to find the most worthwhile investments for you.
Understand What a Realistic Return Is
If you decide to invest in something that promises to make you thousands upon thousands of dollars each week….you might want to reconsider. Yes, investments are a way of letting your money grow, but that growth can only happen if you are looking long term. These weekly paychecks of thousands of dollars that some investments promise is not realistic.
Don’t Invest in Something You Don’t Fully Understand
I feel as though this should be obvious, however, for some reason, for so many people it isn’t – don’t invest your hard earned money in something that you do not understand. If someone suggests that you invest your money in a product or a stock and you do not understand the product, how the stock market works, what you stand to gain or what you stand to lose, why do it? Now, that is not to say that having to do some research prior to investing is wrong – that is a wonderful thing – and something that everyone ought to do. But if even after doing some research you still do not fully understand an aspect of the investment, then please, take it as a serious red flag that that particular investment might not be for you
Choosing to invest your money is a big deal, and it can be kind of overwhelming at times. You work hard for your money, so to risk it in an investment can be nerve wracking. However, by being realistic about your expectations, asking the right questions and using the resources available to you, financial wealth is possible.