5 Investing Mistakes That Cost You Money

AMA6-12-14Investing is supposed to make you money, not make you lose it. But it’s easy to fall into a few traps that can cause exactly that – whether you’re new to investing or have been around the block a few times. Regardless of how you’re investing, financial professionals point to five common mistakes that can derail investing success:

Not Establishing Clear Goals
Although of course your goal as an investor is to gain more money, it helps to be much more specific than that. How much money do you want to acquire – and in what kind of time frame? What resources do you have to make that possible? Asking questions like this can create a clear picture of the results you want. Then,

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break that goal down into smaller steps.

Leading With the Heart, Not the Head
While successful investors often credit a “gut” feeling for a successful investing decision, subjective investing – prompted by emotion, not logic – can lead to trouble. Being objective about the pros and cons of an opportunity and making decisions based on logic leads to better results than impulse buying and sentimental attachments to things that just don’t yield.

Failing to Diversify
It’s been said again and again: putting all your investing eggs in one basket means that the basket may fall apart. Spreading investments over a variety of markets and holdings offers protection against a failure in any one aspect of the process and offers opportunities to recover from a localized disaster.

Not Factoring in Costs
In some ways, the old adage is true: you do have to spend some money to make money. But all too often eager investors forget that fact. Fees paid to advisors and other investment professionals, closing costs and down payments on real estate, and a host of other costs have to be taken care of up front. Failing to allow for those can stop an investing effort before it even begins.

Trying to Get Rich Quick
If it looks too good to be true, it probably is – and investors who want quick money are apt to get burned by a variety of scams, strategies and schemes that aren’t sustainable for the long haul. Successful investing often is a waiting game, with returns that come over time.

Investing success depends on getting educated about investing, doing your homework and staying in charge of he process, as Jason Hartman recommends. And that’s the way to avoid those classic investing blunders, too. (Top image:Flickr/marchand)

Read more from The American Monetary Association:

Data Theft Crosses All Borders

Gen Y: Changing the Economic Game

The American Monetary Association



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