3 Most Common Mistakes Investors Make

…I remember just last month, it was the beginning of a new year and I sat down and did an exercise on my values and goals…

…it only took 5 minutes to do the first exercise and 1 minute to do the second…

…and then I realized that I had been putting my focus on growing my business, when my biggest goal was to have another baby…

…I immediately course corrected and changed my focus on what I really wanted…

…so I had been working hard on a goal that was not my priority…

…this happens when we are investing as well…

…we can spend a lot of time researching and looking into good funds for us to invest in…

…and then in the end we are blind to what our biggest priority is…

…for example, if you want to grow your money to retire, you are not going to put all of your money in bonds….

…vice versa, if you are going to retire and tap into your retirement income, you are not going to leave it all in stocks…

…if you never plan on tapping into principle and want dividends, then you will be looking at only stocks that pay dividends and so on…

…often times investors don’t think about the overall purpose of their investments…

…or maybe you have different pots and each has it’s own purpose…

…whatever the case may be, you need to be clear on what it is that you want BEFORE you invest…

…and you need to check in on your goals regularly to make sure you stay on track…

…you will accomplish goals and then reset new ones…

…you will change your goals as your life changes…

…here are some guidelines for making SMART goals:

1) Specific – $3,000/mo in passive income consistently month after month

2) Measurable – for example, I will make at least $3,000/mo.

3) Attainable – $3,000/mo in passive income consistently month after month in 2-5 years.

4) Relevant OR Risky – I learned that it needs to stretch you, or make you take a risk, it’s something that you need to step out to get…so if you make $10/mo in passive income right now, then this goal will stretch you…if you already are making $2,500.00/mo, then this goal may not be big enough.

5) Time – when do you want to make this goal by? Write a date by which on or before you will have achieved your goal…

…so you have your money in your investments and the stock market goes down…

…as you see the value of your portfolio going down, and your hard earned money shrinking, you want to save what you have left…

…so what do you do?

…well, if you are like most people who don’t have a lot of money, you will sell…

…if you have been time tested and realize that the stock market always has its ups and downs, then you will definately keep what you have…

…how about if you hear about his new great stock that your uncle just invested in that made him a fortune…

…are you going to buy that?

…well, if he’s already made his fortune then that means the stock that was once low prices is not high…

…you have to think carefully before you invest in one single stock, especially when it’s already high priced…

…oh, but your uncle made a fortune!

…well, what did he lose in the process?

…how many times has he dumped money on a sure pick to see it fail?

…what is his REAL NET RETURN after all of his initial losses?

…do you really know the whole picture?

…so you got a stock at a lower cost, then it went up and you sold it for a profit….

…well, you only know what you really made AFTER you subtract the fees you paid when you bought, and when you sold…

…and AFTER you subtract any taxes that you are going to pay on the gain…

…so if you sell within a year of buying, then you have to pay short term gains tax, which is a lot higher than if you held onto your stock for longer than a year…

…some good questions to ask yourself are:

1) What are the fees that I am paying for my investments?
2) How much do I have to pay in taxes to access that money now or later?