Avoiding Critical Investment Mistakes
Tuesday, February 16th, 2010Dogs bark, fish swim and investors make mistakes. It is just something that happens. The important thing is to learn from these mistakes, and the mistakes of others, to avoid making the same mistakes time and time again.
The first critical mistake that investors often make in their quest to create wealth is not sticking to a written investment policy. Investors who are successful in their field adhere to an ingenious, unswerving investment policy. If you are constantly making changes to your investment strategy, you are destined to make bad decisions.
An investment policy is a statement of how you are planning to invest, not considering changes in the markets. You write and sign the policy prior to a thorough analysis by a financial advisor in order to determine your level of sophistication, investment goals and tolerance for risk. The policy is implemented into your wealth creation strategy and maintained throughout your entire life.
Another critical mistake that investors often make, especially those who are new to the markets is trying to base all of their investment decisions on past performances. Past performances are a great reference for designing an effective wealth creation strategy, but should not determine every move you make.
Finally, one of the most common mistakes made by investors in search of financial freedom is not determining the ultimate purpose of each investment before it is ever made. You invest money so it will grow, or at least retain its current value. Every investment that you make has to have a clear purpose for why the money is accumulated. You can make the reason for investing anything you like, such as car fund, retirement income, dream vacation, education, etc.
Many new investors find it helpful to connect with other investors who are successful in their fields. You will be able to learn about the mistake that they made on the way up, and what you can do to avoid making the same mistakes.
Sean Rasmussen
Success Communicator
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