In this episode of Money Talk with Tiff, Tiffany Grant delves into the common investment mistakes that can hinder your financial growth and how you can avoid them. Tiffany discusses the importance of diversification, avoiding emotional investments, the pitfalls of trying to time the market, and much more. If you're looking to stabilize your returns and enhance your investment success, this episode will provide you with valuable insights and strategies.

Check out the full show notes: https://moneytalkwitht.com/podcast-show-notes/common-investment-mistakes/

Key Points Discussed

Lack of Diversification

• Avoid putting all your money into one investment or asset class.
• Spread investments across different asset classes and even international opportunities to mitigate risk and stabilize returns.

Emotional Investing

• Don't make investment decisions based on emotions such as fear or greed.
• Develop a clear investment plan and stick to it irrespective of market conditions.

Trying to Time the Market

• Predicting market highs and lows is incredibly challenging.
• Focus on a consistent investment strategy like dollar-cost averaging to reduce impact of market volatility.

Neglecting Research

• Understand the fundamentals of assets or the market before investing.
• Educate yourself through financial news, market trends, educational courses, and podcasts.

Ignoring Fees and Costs

• Be aware of management fees, trading costs, and other charges that can eat into your returns.
• Seek low-cost investment options and compare fees across different platforms.

Not Having a Plan

• Define your financial goals and create a strategy to achieve them.
• Regularly review and adjust your plan to stay aligned with your objectives and risk tolerance.

Ignoring Risk Tolerance

• Assess your comfort level with risk before investing.
• Choose investments that match your risk profile and adjust your portfolio accordingly.

Resources Mentioned

• Unlocking the Potential of Financial Planning with Empathy and Strategy | Ep. 346

Connect with Tiffany

• Website: moneytalkwitht.com
• Instagram: @MoneyTalkWithT
• Twitter: @MoneyTalkWithT
• Facebook: @MoneyTalkWithT

Have a question for Tiffany to answer on the podcast? Submit it at moneytalkwitht.com/asktiffany

Don't forget to like, subscribe, review, and share the podcast.

Rate the podcast to help others find and benefit from the content.

Thank you for joining us for this week's episode. Remember, investing is a journey of continuous learning. By avoiding common investment mistakes and adopting a disciplined, informed approach, you can achieve your financial goals. Until next time, spend wise by spending less than you make—a word to the money wise is always sufficient.

Support this Podcast

Copyright 2024 Tiffany Grant

You know what it is. That's right. It's time to talk money with your money

nerd and financial coach. Now tighten those purse strings

and open those ears. It's the Money Talk with Tiff

podcast.

Hey. Hey. And welcome to Tiffany's Take, where I answer your money questions right here

on the podcast. So if you want your question answered, then go to

moneytalkwitht.comXTiffany

and I'll be more than happy to answer for you. So y'all

must really love this investment topic. So we're going to keep this

investing theme going. Someone

asked, okay, Tiffany, what are some investment mistakes that

people make and how do I avoid them? So

I came up with a list of some investment mistakes and some

things that you can do to avoid those mistakes.

So let's hop right in. First and foremost, which I've

hit on the last couple episodes, but lack of

diversification. I feel like this is the most common investment mistake that

people make. And what that is is putting all your money into one

investment or asset class. And then this can lead

to significant losses if that investment doesn't perform well.

So that's like putting all your money in crypto or putting all your money in

real estate or putting all your money in stocks, whatever the case may

be. But if that tanks, then what? You have

nothing to fall back on. So the solution

to that is just to diversify your portfolio by spreading your investments

across all the different asset classes. So this strategy

can help mitigate the risk and stabilize your returns.

One thing that I like to tell people, when it comes to

diversification, also think about diversifying

outside of the country. So don't just look at domestic

opportunities. Also look at international opportunities as well.

Because what if I told you during the 2008,

2009 financial crisis, people that were invested

in global. So in international stocks,

they didn't get as much of a hit as people that were only invested

in domestic stocks, which is, you know, just U.S. stocks.

So that just shows you the power of diversification. Some people

actually made money during that time in international things versus,

you know, the US Was going through so much domestically,

and people were making money international. So that's why you always want

to have diversification in all ways that you can. Now you

can overly diversify. That is also a

thing. But most people don't get there. So don't even worry about

that. Just make sure that you diversify as much as possible.

The next mistake I see people make is emotional investing, which I kind

of hit on in previous episodes, but that's making investment decisions

based on emotions such as fear or greed.

Usually this results in buying high and selling low. So

this goes into trying to follow the trends,

you know, trying to be greedy. Oh, GameStop is going up. Let me get in.

Guess what? By the time you see GameStop going, because it's not based on any

fundamentals, not based on their financials, it's just based on what you see is

trending. So mind you, is trending for a reason, because it's already on

the increase. So now if you hop in, what you're doing is you're

buying high. And then once you sell, you're going to have to sell low.

Because if you're following the trends, once it starts dropping, it's

already dropping. So the solution to this is

to develop a clear investment plan and stick to it regardless of what

the market does. So keeping that long term perspective can help

you stay calm and make rational decisions. Most

investors are emotional investors and unfortunately that's

what gets in the way of returns. So if you can get those

emotions under control, like I said, one of my strategies

is I don't even look at it most of the time, then

that can help you as well. Which ties into number three, which is trying

to time the market. So timing the market is attempting to predict and

capitalize on the market highs and lows, and it's incredibly

challenging to do and it often results in missed opportunities.

I would say you cannot time the market. I don't care what market you in,

you can't time it. When I bought my house in 2017, I had no

idea it'll be worth as much as it is today. So

my thing is you just get in and then you just ride the waves.

That's just how it goes. So focus on a consistent investment

strategy, such as dollar cost averaging, which involves investing a

fixed amount regularly. This approach reduces the impact

of market volatility because if you are putting in

a certain amount every single month, every single week, whatever you decide

to do, then you're starting to average those

costs together. And so that way you're not

losing as much, if that makes sense. I'll say the

next investing mistake people make is neglecting research.

So investing without understanding the fundamentals of assets

or the market can lead to uninformed decisions and losses.

So this goes back to what I said last episode. I think it was

with Warren Buffett. He said, if you don't fully understand

something, then don't invest in it. And that is his

strategy and he is one of the best investors of all time.

So make sure that you really understand how

things work. So that way you can make informed decisions. So

take time to research and understand those investments,

read the financial news, follow market trends, consider taking

educational courses, listening to podcasts, all that stuff to boost

your knowledge. It'll pay you so much in the long term.

Another mistake is in ignoring fees and

costs. So overlooking the impact of management fees,

trading costs and other charges can erode your investment returns over time.

And especially if you hire a financial advisor, really

understand how they're getting paid, what that looks

like, and that you're they're acting in your best interest.

I'll make sure I link to a podcast episode I did about what to

ask financial planners and financial advisors. So that way if you decide

to go that route and not do it yourself, you have some questions that you

can ask. But anywho, the solution to this is to be aware

of all fees associated with your investments and seek low

cost options where available. Comparing fees across

different platforms, investment products people can save you

money in the long term. The next mistake people make

is not having a plan at all. So investing without a

clear plan or set goals can lead to impulsive decisions and

unclear expectations. This falls in line with just

investing because you see everybody else investing. No,

invest because it's something that's going to help you. So define

what your financial goals are first and then create a

strategy to achieve them. And then regularly review and adjust your

plan to make sure that you stay aligned with your objectives and your risk

tolerance. Because every so often your portfolio

needs a rebalance, which means that you're moving money around

to make it so that it's still on track to what you're trying to accomplish.

And you won't know when it needs a rebalance if you don't know what you're

doing it for. So make sure that you have a

plan and then the last investment mistake. I'm sure

I can name a ton, but I'm trying to keep this episode short. Sweet to

the Point is ignoring your risk tolerance. So

that's failing to consider how much risk you're comfortable with and that can

lead to anxiety and poor investment choices. So

make sure you assess your risk tolerance before you invest and choose assets

that match your comfort level. There's so many options out

there that regardless of if you

would lose sleep if you lost $10 or if you would lose sleep

if you lost $1,000, like there's something out there for everyone.

So just make sure that you adjust your portfolio as needed to make sure

it aligns with your risk profile. So if you avoid these common

mistakes and adopt a discipline informed approach, you can

enhance your investment success and work towards achieving your

financial goals. So remember though, investing is a

journey and it's continuous learning and as you

continue to learn, it'll help you navigate it more effectively.

So make sure that you're keeping all of this in mind as you start on

your investment journey, or as you're already on your investment journey and maybe

at the brought up some things you didn't think about. Start keeping these things in

mind. And if there are any questions that you want me to

answer on the podcast, please go to ww

moneytalkwitht.com Xtiffany and

I'll be more than happy to answer for you. But until next time, I hope

you have a wonderful rest of your week. Don't forget to like,

subscribe, review, share all of those good things.

Rate. It really helps us find more people

like you. All right, until next time. Bye.

Thank you for listening, joining and being a part of the Money Talk with Tiff

podcast this week. You can check Tiff out every Thursday for a new

Money Talk podcast, but if you just can't wait until next week, you

can listen to previous podcast

episodes@moneytalkwitht.com

or follow TIFF on all social media platforms at Money

Talk with T. Until next time. Spend wise

by spending less than you make. A word to the money wise is

always sufficient.