Financial professionals love to talk about best practices when it comes to investing. You should do this and that. But, what about what you shouldn’t do? It’s just as important to avoid commonly made mistakes as it is to follow rules of thumb from top investors. To help you avoid a financial misstep, here are five things that you should never do when investing.
1. Don’t sell your investments in a panic.
The worst time to sell your investments is when you’re panicking. Take a step back and consider all your options before selling an investment that could bring you a significant return in the future. The idea behind panic selling is that you are trying to protect the money that you have left when a stock takes a dive. The reality, however, is that the stock market—even in its most volatile state—will ebb and flow. Of course, there may be cases when a company can’t recover financially from an economic downturn, but, overall, it’s better to give the typically more stable companies the benefit of the doubt and keep your money invested until they make their potential return. Financial decisions triggered by emotions rarely come out in your favor.
2. Don’t think about investments in the short term.
As a nod to our first point, thinking about investments in the short term will also not provide you with the best return. Investing is a long game. You could wait years—or even decades—for your investments to provide you with the returns you’re looking for. Invest with a long-term strategy in mind, and keep a calm and steady approach.
3. Don’t be afraid to get a second opinion on advice from friends and family.
Family and friends are well-intentioned and always want the best for you. However, it’s good to vet any investment advice from friends and family with a financial professional. Even though certain strategies may currently work or have worked for them in the past, a financial advisor can look at your finances as a whole, giving advice based on a comprehensive viewpoint that is specific to your circumstances and needs. All in all, a financial advisor can help you implement a financial strategy that will make sense for you and align with the good intentions your family and friends desire for you.
4. Don’t check your investments too often.
This point is what often leads people to panic and sell their investments or obsess over financial worry. Your investments will inevitably rise and fall, so watching them on a too-frequent basis isn’t the best use of your time or emotional energy. Set a schedule to check in on your investments that feels good to you—every three to five months is recommended.
5. Don’t hire a financial advisor that you don’t feel comfortable with.
Investing can be an exceptionally profitable piece of your financial strategy, especially with the right person guiding you. Your financial advisor acts as your ally, keeping your best interests in mind at all times. It’s crucial that you trust your advisor to make the best choices with your hard-earned money. Ask questions, talk about your goals, and learn more about your advisor’s background before you begin working together.
Ready to invest with a professional on your side? Contact the Dobyns Wealth Team to schedule an appointment with an advisor.
