Investing your money is always a bit of a gamble, no matter how carefully you do it. If you’re not financially sophisticated about investments, you probably rely heavily on the advice of your financial advisors.
Just the same, you need to have some idea of the mistakes that happen with investments so that you can keep an eye on what your financial advisor or broker is doing with your money. Here are some of the biggest investment mistakes to avoid:
1. Risky speculations
Sure, there’s a lot of money to be made in certain industries — but there’s also the potential for a lot of loss. When a market is very volatile (like the stocks in various cannabis companies right now), it can artificially inflate the price of a stock. If you buy in at the wrong time, a pricey investment can suddenly turn into an expensive lesson when the stocks level out again. Remember: There is never “a sure bet” when it comes to investments.
2. Not identifying your goals
You can’t really figure out how to invest your money wisely if you don’t know your goals. That’s critical when it comes to deciding the appropriate level of risk and diversification you should have. If your financial advisor doesn’t talk to you about your ultimate goals, that’s a big red flag that they probably don’t have your best interests at heart.
3. Relying on real estate
If there’s anything the real estate market collapse in 2008 should have taught people, it is that putting too much of their wealth into real estate is a bad idea. Don’t trust an investment advisor who seems like a “one-trick pony” with their advice.
4. Playing tricks with taxes
Never trust a financial advisor who seems to play loose and free with taxes. Tax planning is a tool for maximizing your wealth, and there are plenty of legal ways to do so. However, you don’t want to get involved with anyone who suggests that it’s okay to dodge what you owe in any way.
If you relied on a financial advisor’s or broker’s guidance to your detriment and you think that you may have been inappropriately advised or flat-out cheated, consult with an attorney to find out what options you may have.
