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30 Oct 2017
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6 Mistakes Investors Make
Starting too late
The power of compound interest is astounding, so the earlier you take advantage of it, the more it will work for you. If you start out earlier, you can start with less, invest less and still end up making more than if you started out later. At the same time, it’d be unwise to jump into anything before completing thorough research. Start looking into what fits your lifestyle and speak to a certified CPA sooner, rather than later.

Paying high fees
Read the fine print. Broker's commissions can negate all of the hard-earned interest that you have accumulated. Don't let this happen to you - pay attention to what you are being charged. The more you pay, the less you keep. This is also true if your using an app to invest by yourself. See what monthly fees or percentages whichever company you’re using might take out of your investment.

Investing Emotionally
Successful investing consists of planning and reason. Once emotion gets involved, it can negate all of the preparation that you did to construct your investment strategy. Keep using the strategies that have consistently made people rich over the years, don't look to follow the new and exciting trends that haven't yet stood the test of time. A common mistake is investing in a new product just because you like it or it looks good. Following your heart works for a lot of things, investing is rarely one of them.

Using a one-size-fits-all plan
Your individual needs should trump any ideas of blindly following any plan. Keep an account of how much risk you are willing to take, your cash flow and what your time frame is. Your portfolio should match your needs. One-size-fits-all plans never work well, because a wealthy investor that has a diverse portfolio tying up millions of dollars is going to very different needs and goals than the thirty year old trying his hand with a few thousand dollars.

Not taking taxes into consideration
The net profits from stocks are taxable as capital gains. Being in a tax-deferred investment account will stop this from eating away at your savings. Losses can be partially recovered through tax strategies as well. Your CPA can help you understand your finances better and prepare you to handle situations with confidence as they arise.

Overly Risky Investing
More risk, more reward, right? Investing in extremely risky stocks or mutual funds can pay off big time, but it can also leave you with a diminished nest egg if you gamble wrong. There are many great investments that offer decent returns without putting your funds in excessive danger. Your CPA can help assess the right amount of risk for you, but in the end you need to know exactly what you feel comfortable with.

Borrowing Against Stocks
When economic times are good, you may find yourself tempted to borrow against the value of your stocks to buy more stocks. This practice is enticing (and common) because returns are amplified if the stock price goes up, because you're reaping the profits from stocks you normally couldn't afford. Aggressive market players, such as some hedge funds, leverage borrowed money to enrich returns for wealthy investors. But there’s a lot of risk in buying stocks on margin. If the value of the stocks you purchase with the borrowed money falls, you could be forced by your brokerage to sell the stocks at a loss to repay the loan – even if you think the long-term prospects of the stocks is promising.
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