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Avoid These 3 HUGE Investment Mistakes
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Ok, I obviously capitalised HUGE because it looks good in the title :) but these are 3 investment mistakes that you definitely want to avoid.
Number 1. "What's Working Now"
It's tempting to back the companies that are winning right now. If you see a company boost its share price by 200% in a 12 month period, or you've been following some influencer who keeps talking up a surging crypto coin or investment opportunity, the fear of missing out starts to hit home. As if there is some shortcut to easy street, and ignoring this wave is a mistake waiting to happen. The problem with anything of this nature is that what can make you, can break you, and short-term wins rarely lead to a sensible long-term investment strategy for you and your family. We know what works, it's not particularly exciting, but investing shouldn't be. Find entertainment elsewhere. Don't succumb to recency bias, and feel inner peace by aligning with long-term evidence.
Number 2. "Don't Be A Divvy"
Don't join the dividend cult. Search "dividend investing" on Youtube. Then tell me whether they've got your interests at heart, or whether they used the "dividend" theme to get views. It's such a compelling story. Buy shares, get cash for nothing. Treat yourself to passive income. The reality is, investing sensibly includes dividends, but it doesn't preference companies that pay dividends, or companies that pay a certain dividend yield. It's a distraction. You SHOULD be investing, but you shouldn't be chasing dividends. Buy a sensible, globally diversified portfolio, and worry not about the irrelevance of the dividend yield. Certainly don't get dragged into thinking you know better than the market (which is the collective knowledge of EVERYONE, everywhere).
Number 3. "The Wrong Risk"
I'll keep this short and sweet. Inflation eats the purchasing power of your cash every day. Over decades, it decimates the value of currency. Hiding from volatility (the fluctations of the number on your statement) is a one way ticket to an inflation problem. So balance the risks. There is no such thing as "no risk", you just have to decide to which degree you want to manage the two key conflicting risks. Take total capital loss off the table with diversification, and then strike the right balance on the other two key risks. There are a million "risks" out there, but when it comes to investing, these are the only three you really want to give any head space to.
Chapters
00:00 - Intro
00:56 - Mistake 1: What's Working Now
04:28 - Mistake 2: Don't Be A Divvy
07:29 - Mistake 3: The Wrong Risk
11:50 - Summary
** This video does not constitute financial advice. It is presented for guidance and entertainment purposes only. Please seek independent and personalised financial advice tailored to your own circumstances and objectives before making financial decisions. Past performance is not a guaranteed indicator of future performance and may not be repeated. Investing puts capital at risk and you may get back less than you invested. Investment values can fall as well as rise. **
Number 1. "What's Working Now"
It's tempting to back the companies that are winning right now. If you see a company boost its share price by 200% in a 12 month period, or you've been following some influencer who keeps talking up a surging crypto coin or investment opportunity, the fear of missing out starts to hit home. As if there is some shortcut to easy street, and ignoring this wave is a mistake waiting to happen. The problem with anything of this nature is that what can make you, can break you, and short-term wins rarely lead to a sensible long-term investment strategy for you and your family. We know what works, it's not particularly exciting, but investing shouldn't be. Find entertainment elsewhere. Don't succumb to recency bias, and feel inner peace by aligning with long-term evidence.
Number 2. "Don't Be A Divvy"
Don't join the dividend cult. Search "dividend investing" on Youtube. Then tell me whether they've got your interests at heart, or whether they used the "dividend" theme to get views. It's such a compelling story. Buy shares, get cash for nothing. Treat yourself to passive income. The reality is, investing sensibly includes dividends, but it doesn't preference companies that pay dividends, or companies that pay a certain dividend yield. It's a distraction. You SHOULD be investing, but you shouldn't be chasing dividends. Buy a sensible, globally diversified portfolio, and worry not about the irrelevance of the dividend yield. Certainly don't get dragged into thinking you know better than the market (which is the collective knowledge of EVERYONE, everywhere).
Number 3. "The Wrong Risk"
I'll keep this short and sweet. Inflation eats the purchasing power of your cash every day. Over decades, it decimates the value of currency. Hiding from volatility (the fluctations of the number on your statement) is a one way ticket to an inflation problem. So balance the risks. There is no such thing as "no risk", you just have to decide to which degree you want to manage the two key conflicting risks. Take total capital loss off the table with diversification, and then strike the right balance on the other two key risks. There are a million "risks" out there, but when it comes to investing, these are the only three you really want to give any head space to.
Chapters
00:00 - Intro
00:56 - Mistake 1: What's Working Now
04:28 - Mistake 2: Don't Be A Divvy
07:29 - Mistake 3: The Wrong Risk
11:50 - Summary
** This video does not constitute financial advice. It is presented for guidance and entertainment purposes only. Please seek independent and personalised financial advice tailored to your own circumstances and objectives before making financial decisions. Past performance is not a guaranteed indicator of future performance and may not be repeated. Investing puts capital at risk and you may get back less than you invested. Investment values can fall as well as rise. **
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