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May 2, 2017

7 Deadly Mistakes to avoid while investing in your 20s

May 2, 2017
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investing in your 20s

The following article is contributed by Amy Nickson.

7 Deadly Mistakes to avoid in your hard earned money investment
When you make a decision to invest money for your future, you need to check out which investment strategy can suit you the best. You need to learn a number of things before you select any investment strategy. With the help of the right strategy, you can secure your financial future. However, you should be aware of some investment mistakes that can crumble your finance.

1. Not determining the investment purpose

Before investing your hard earned money, it is important to determine the purpose of the investment. In other words, you should have a clear idea about the time frame of your investment as well as your risk tolerance. It may be the case that you don’t want to lose your money at all or you have very low-risk tolerance. In such situations, it would be better to invest your money in safer options. Again, you may be interested in investing your money for a long period. If you invest your money for the long term, chances are there that you may receive higher return in the future.

2. Not knowing the investment period

As I said earlier, you should know how long you would like to let your investment grow. You need to decide whether the investment you are making is for a few months or some years. If you’re planning for your retirement days, you need to make investment for a long term period. Investment can also be done for a short term period if you want to buy and sell any scheme.

3. Not deciding upon the investment accounts

Once you have determined the purpose of your investment, the next step would be to decide upon the investment accounts. The most popular type of investment account is to make investments through a brokerage account. With the money in the brokerage account, you can make your investment decision regarding the buy and sell. Some brokerage accounts require you to maintain some minimum opening balance. Again, some companies charge some fees with a balance below a certain amount.

4. Not opting for non-traditional investment account

You can also opt for non-traditional account options. These investment options include DRIP (Dividend Reinvestment Program) and mutual funds. With DRIP programs, you can directly invest in the stock market by buying and selling of stocks. Again, if you are little afraid of investing in the stock market on your own, you can go the mutual fund route. The professional fund managers of the fund houses invest your money in various assets to offer you good returns.

Investing in your 20s

5. Not doing the necessary paperwork

After you have decided upon your possible investment options, the next step is to do the necessary paperwork in order to sign up for your brokerage account. Once you sign up for a brokerage then you’re able to buy shares of a company.

6. Not obtaining proper education

While choosing the right investment strategy, you should spend sufficient time to do proper research about stock market and investments. It is wise if you obtain the proper financial education so that you can check out where you are investing and avoid risks of losses. However, you can also depend on a financial advisor who will educate you and help you to make the right investment. The more you learn about finances, the easier it will be for you to manage it in a better way.

7. Not knowing the risk tolerance

As I have said before, it is important to know how much risk you want to take when you make any investment. The more risk you take, the higher returns you may get or even lose everything in an investment. However, you should take some risk when you make your investment in the stock market. some people like to take some risk when they make any investment. You can select a mutual fund manager who will help you purchase and sell stocks so that you can avoid risk and earn good returns.

Lastly, when you make any investment, you do it with the hope that you will get good returns. But at certain times, when you may have to suffer loss. It is difficult to accept financial loss and so, you should try to learn from your mistakes. When you diversify your investments, it allows you to save money in different options and as such, there are lesser chances of risks involved in it.

Author’s Bio: Amy Nickson is a web enthusiast. She completed her graduation from Oglethorpe University, Atlanta, Georgia. She works as a financial writer and she shares her expertise through her crisp and well researched articles based on money management, money saving ideas, debt, investment and so on. You can follow her on Oak View Law Group where she shares her expertise on personal finance field.

 

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