5 COMMON PROBLEMS OF NEW INVESTORS

Before investing, it is very important for us to make a research and study everything about investment. New investors should have comprehensive financial plan. Without planning, the chance of losing your money is higher than chance of winning.

The following are a few problems that first-time investor struggle with and how to solve them.

UNABLE TO IDENTIFY RISKS

Majority of the new investors are not aware of some risks in investing. Remember that investing without knowledge about risks is like watching television while it is off. To avoid this, you have to be knowledgeable about different risks of investment. If you know this, the chance of losing your hard earned money is small. Another thing is that knowing their risks of investment helps you to decide what kind of investment is suitable for you.

LIMITED CAPITAL

Many people wants to invest but they fear that their capital is too small to start. They are thinking that they need big capital to start investing.

Before doing investing, set first your goal. After setting up your goal, look for a financial institution where you will put your investment. Nowadays, there’s a lot of financial institution offering investment at low deposit. You can also use online platform if you want to trade. If you have extra $200, you can start buying multi-asset stocks using eToro or XM. Budget your income and save money for your future investment.

Want some tips about saving money? Read my article How to Save Money.

BAD TIMING

Before you invest, you need to understand the term “volatility”. Many investors lose their money because of bad timing in investment. Before you invest, study the market condition. Is there any crisis, pandemic, political war or any event that can hit the market down. Smart investor always think before they invest. They plan before they buy. They know when to sell. Proper timing is important.

We can avoid this risk if we know the so called cost averaging wherein you will invest into the market bit by bit and over a long period to mitigate larger fluctuations in the value in your portfolio.

LACK OF ADVICE

Do not rely on the information you are getting from the internet. Some of suggestions there are actually contradicting to each other and it will confuse you. I suggest that you need to have a financial advisor. A financial advisor is the person who is knowledgeable in investing. He or she will guide you on how to invest properly but of course you will pay some amount. Do not think about your payment because having an advisor, you can minimize risk and have a better chance of gaining profit.

UNORGANIZED PORTFOLIO

If you are investing, you need to setup your own investment portfolio dashboard where in you can track your investment. There are lots of software and application to use as your investment dashboard. You can use simple Microsoft Excel in tracking your investment or if you have a budget, better
purchase software or services like what sisense.com is offering.

The investment portfolio dashboard is meant to keep investment managers up to date with portfolio performance and allocations. The data will allow managers to change allocations on the fly as well as keep their clients informed on performance.

Problems in investing is always there. All we have to do is find a solution and don’t let our goal stops by this problem. Keep on investing and soon we will be the harvester of the fruit of our investment.

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