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Investment mistakes are always expensive, which is why it’s
best to learn from the experiences of others. With that in mind, here are the
top ten tips that most investors really wish they had heard (and believed)
sooner.
1. Start
Early
The power of compounding means that the sooner you start
investing, the more time your money has to grow.
Even small, regular investments can add up significantly
over time if they’re the right investments and if you wait for long
enough.
Now, the best time to buy crypto is clearly in presale, so
you have to find the top
presale cryptos to choose from in order to maximize your
profit.
There’s just one problem with this strategy: it’s really
hard to know when to sell. We all love to imagine buying BTC at $1 per token
and selling at $67k, but the truth is that you would have sold it as soon as it
reached $20 (and you would feel so proud).
You need to have realistic expectations.
2.
Diversify Your Portfolio:
Don’t put all your eggs in one basket. Spread your
investments across different asset classes, sectors, and geographic regions to
reduce risk.
Sure, if you knew which of your assets was going to yield
the biggest profit, putting money into anything other than this would be pure
waste. However, you don’t, and you need to have a contingency plan even if the
market doesn’t move in the direction that will suit you the most.
When
diversifying, make sure to pick assets that have a low correlation.
Remember, you’re not doing this for profit but for safety.
3.
Focus on Long-Term Goals
Investing is not a get-rich-quick scheme. Focus on your
long-term financial goals and stay patient.
Understanding your long-term goals is also something that
determines your overall trading strategy. Think about it: if you have a lot of
time until retirement, you can afford to make a riskier investment here and
there. The potential trade-off would be worth it, and even if things go wrong,
you would still have the time to fix the problem.
Understanding why you’re saving money can also help you
stay motivated. Wanting to buy a place, get married, start a family, and more
are just some such goals, and they’re all great at keeping your eyes focused on
the prize.
4.
Educate Yourself
Take the time to learn about different types of investments
and how they work. You need to understand the factors that affect these
investments and all the financial mechanisms you have at your disposal to get
the most from them.
Also, in order to learn risk management, you should
definitely learn how to understand the odds. Now, we’re not suggesting that you
go to anonymous casinos in order to get some practical experience on the
subject matter (although any experience is valuable). Instead, look up a course
on investing and risk management.
Formal education is unfairly underestimated, and you really
need to do something about it.
5.
Keep Emotions in Check
Avoid making impulsive decisions based on market
fluctuations. Stick to your strategy and stay calm during market volatility.
Market conditions always change, and if you take our advice
and diversify, you’ll always be in one or two markets where volatility is
especially high. You can’t sell on every sign of change.
There are also a lot of psychological phenomena like the
gambler’s fallacy or the sunken
cost fallacy. Just because you have a subjective feeling about the
future of the market, this really doesn’t mean too much.
Just remember to keep your emotions in check and always
look ahead.
6.
Regularly Review and Rebalance
Previously, we’ve talked about diversifying your portfolio
based on correlation and market risks but these risks change over the course of
time and you don’t want to be stuck in the past.
Let us return to Bitcoin really quickly. While its cost was
still low, any movement on the market was incredibly high. Today, even if BTC
loses $30K of value, we’re still talking about just 50% of its value, but in
the past, when it jumped from $1 to $100, this was a 10,000% increase.
The point is that the conditions changed, and this is no
longer the same investment.
So, periodically review your portfolio to ensure it aligns
with your goals and risk tolerance. Rebalance as necessary.
7.
Invest in What You Understand
Stick to investments you understand and avoid those that
seem overly complex or speculative. Why? Well, because investing in an asset
you don’t understand is no worse than gambling.
It’s even worse when you don’t know the rules; you’ll
instinctively try to ascribe meaning to things that are happening, and you’ll
always fail. These things are not intuitive, and trying to understand a chart
by observing it is most likely going to result in a failure.
So, stick to something you understand best and then
increase your efforts to learn even more.
8.
Watch the Fees
High fees can erode your returns over time. Be mindful of
the costs associated with your investments and look for low-cost options.
The problem with fees is that they don’t really provide you
with any kind of value. They’re just a waste of money. You get the same amount
of an asset you originally intended to buy; you just pay more for it.
If there are platforms that charge lower fees, buying there
would be both intuitive and smart. You will be left with more money actually to
spend on the assets you need.
9.
Don’t Try to Time the Market
It’s nearly impossible to predict market movements
consistently. Focus on time in the market rather than timing the market.
Previously, we talked about people who believed that they
could have been the person to discover Bitcoin if they had another chance. Even
if that were the case, they wouldn’t sell it at the best possible moment. Sure,
some people sold at $17K or $21K in 2017, but what about those who waited until
it dropped to $8K again?
What about those who sold at $17K? At the time, they made
an insane profit, but today, a single BTC is worth $67K. There’s always better,
and there’s always worse. Trying to time the market will make you go insane.
10. Stay
Disciplined
Stick to your investment plan, even when the market is
volatile. Consistency and discipline are key to successful investing.
This is one of the reasons why trading strategies are so
popular. They make your trades more systematic and your performance on the
market significantly more consistent. This is how you stay disciplined and
ahead of the curve.
Remember that investing is a marathon and not a sprint.
Learning this in time is something
that a lot of investors will envy you for
Let’s return to our favorite example – buying BTC pre-2017.
If you could go back in time, you would have done it, but this is impossible.
What’s not impossible is to learn these ten things in time for them to actually
help you out. A lot of people made expensive mistakes because they didn’t take
this seriously enough.