Top 3 Beginner Investing Mistakes
For many of us, the hardest part of investing is getting started. It’s intimidating!! I get it. So let’s talk about investing MISTAKES that beginners frequently make so that you can avoid them.
1. Mistake #1: Investing Without an Emergency Fund
Do not jump into investing without having financial padding first. This means that before you put ANY money into the market you must have an EMERGENCY FUND to last you 4-5 months- trust me. The stock market is extremely volatile, but over time follows an upwards trajectory. However, when you invest without an emergency fund and need money, you might be forced to sell your investments at a low point in the market cycle, causing you to lock in your losses! Therefore you should only invest with the money you do not need for the next 5 years.
2. Mistake #2: Not Diversifying
Do not put all of your money into one stock or sector- diversify your investments! That means you should put money in areas that would react differently to the same event. Though diversification does not guarantee against loss, it def helps mitigate.
3. Mistake #3: Not Thinking Long Term
Do not invest in a company until you’re ready to PUT A RING ON IT! Obviously, you can get a divorce, but do it down the line- don’t pull a Kim Kardashian/ Kris Humphries! Holding onto investments for the long haul helps to shelter you from low periods spurred by market volatility, aka you likely won’t lose as much money. Additionally, just like with a romantic partner, it's crucial that you develop a deep knowledge of the company and its trajectory before you commit to it, so make sure to research before investing.
And lastly, the biggest investing mistake beginners make is NOT WATCHING THIS VIDEO I made with my boyfriend Warren Buffet about the top 3 beginner investing mistakes, hehe.