Investment Tips: 10 Common Errors In Investing

Investing your money can be a great way to multiple assets for future benefit. But avoid these common investment mistakes.

Before you open an investment account, here are some pitfalls to avoid if you want to hold on to your money or even double it:

1. Know your broker. Don't let just anyone handle your money. Find out who the reputable investment companies are and contact them for information about opening an account.

2. Understand the basics of investment. While you may be willing to pay an investment adviser to manage your account, learn something about the investment process. Seminars on financial planning, investments, or retirement accounts can be hosted by your employer or you may be able to register for one in your community.

3. Don't invest too much at first. Start small, especially if you are raising a family or have other financial obligations. You can buy a single stock share with an unexpected windfall or make small monthly payments toward building an investment account.

4. Don't check your account too often. Watching the daily ups and downs of your account can be frustrating and confusing. While it's okay to keep an occasional eye on your stocks, understand that it's natural for them to follow an up-and-down curve over time. If you see a downward trend, check with your adviser.

5. Don't jump on "hot tips" from unreliable sources. Everyone wants to make a fast buck, but trying to do so in the stock market involves great risk. Don't take just anyone's advice. Instead, study general trends as well as stocks you may want to invest in before taking the plunge. Avoid buying stock in a fly-by-night organization just because someone says you should.

6. Don't wait too long. Start while young if possible. A monthly contribution of $25 over a few decades may be worth more than $50 a month when you reach age 50. Put aside your raises, bonuses, or dividends to add to your investment account; you'll never miss money that you don't see in the first place.

7. Don't risk what you can't afford to lose. Rather than selling the farm (or your home) to bankroll a huge investment account in hopes of striking it rich, just sit tight and let nature take its course. While there have been some overnight millionaires on Wall Street, there have been far more failures who lost everything, including the shirt on their backs. Think of investing as like a savings account, one that could be drained without damaging your family's financial integrity or security.

8. Don't buy just one stock. Diversity by investing in mutual funds, bonds, or even gold or other commodities. Check on a variety of investment options. That way, if one ship goes down, the surviving accounts may be able to still return a profit.

9. Don't panic. If you see your account's value start to fall, keep in mind that all accounts rise in fall over time. Be prepared to ride out the storm without cashing in your chips unless your investment adviser suggests otherwise.

10. Don't stop investing. Some folks set up an account to receive all profit as income. It may be better to reinvest most if not all your profits to increase the size of your holdings. Compounding investments like this can lead to more sizable gains over time.

An investment account is an exciting way to build economic returns for the future. Be prepared to make choices that will balance security with risk in order to maximize your ultimate returns.

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