You want to grow your money but you know that there are only so many hours in a day and you’re working far too hard as it is. You can only work so much without burning out and having a detrimental effect on your career or your business and your quality of life. Saving? That’s certainly helpful but it’s not going to lead to financial freedom especially if you’re still sticking with the same high street savings account with its anaemic interest rate. Could the world of investment help you to achieve the financial wellbeing you desperately crave? Potentially. But if you’re to make a success of yourself in the world of investment, it’s important to educate yourself on how the markets work as well as mastering the difficult balance between being risk-averse and being able to take necessary risks when opportunities present themselves. When you’re new to the world of investment, it’s important to steer clear of these often made and occasionally ruinous newbie mistakes…
Thinking that algorithms can do all the heavy lifting for you
Quants have been using algo trading platforms for years to grow and diversify their portfolios, but a growing subculture of individual investors has arisen in recent years. Algorithmic trading uses complex mathematical algorithms to strategically buy and sell stocks faster and more reactively than any one individual trader ever could. While it can certainly give one an edge, it is not an infallible money press. If you do decide to turn your hand to algo trading it’s important to keep your expectations realistic and to know that you have to dedicate time and expertise to refining and perfecting your algorithm.
Not researching the company whose stock you’re trading
You may see a stock that’s climbing and decide to hitch your waggon to it, investing heavily straight away only to find that the stock’s value plummets and you lose most or even all of your investment. This is the risk that investors face if they don’t take the time to research the company in order to ascertain the cause of that spike in value and ascertain whether it’s a brief spurt or part of an upward trend that could last for months.
Getting suckered by bargain priced stocks
Penny stocks may not cost a penny anymore but they can still be deceptively appealing to new investors. Low-cost penny stocks could skyrocket in value and make you a fortune… But don’t bet the farm on them. There’s a reason why penny costs are so inexpensive. It’s because market analysts have scrutinized them and ascertained that they represent little opportunity for growth. By all means, invest in penny stocks, but invest in them as a small part of a diverse portfolio. Which brings us to…
Keeping all your eggs in one basket
When a stock is performing well it can be tempting to invest heavily in it, but a stock’s fortunes can turn on a dime, and its value may be affected by factors of which investors have little or no understanding. Thus, it’s important to keep a diverse stock portfolio to insulate you against some of this risk.