Are you a victim of your own investment?
29 Mar 2019
Investing is attractive for a multitude of reasons, but perhaps the two most important ones are: excitement, and smart (instead of hard) work. The thrill, the excitement, getting your blood running, your heart pounding – it makes investment almost like a drug. And of course, the opportunity to make some money work the smart way, not the hard way, is also enticing. But all this can lead to people making bad investments, and getting into trouble.
Don’t become a victim of your own investment. Poor decisions with long-term consequences can set your life back severely. Instead of improving your life in every way, you end up in trouble. For this reason we have taken the liberty of writing up this little article on how to not be a victim.
Never borrow money
The worst thing you can do when investing is borrowing money to do it. No matter how certain, no matter how sure you are that something will work, borrowing money from a bank or form friends will not pan out well for you. If you can’t afford an investment up front, then you should simply not buy it at all. The only exception to this rule are high-risk traders who have been in the business for years. Unless you have a decade of successful experience in the stock market, don’t borrow money.
Unpopular vs. underrated investment options
A big issue people make when making an investment is conflating unpopular investments with underrated investments. Namely, people invest in all the main, most popular stocks, and get meagre results (if any). A smart option is going with some lesser known investment options that are viable, like setting up a good Pink Diamond Investment deal, for example. Or, you can go with growth-oriented funds, taxable accounts, real estate-secured debt… Where people do make a mistake is thinking that just because an investment option is not utilized often, that it automatically means it’s a good choice. Be smart, never go in blind.
Tips, tricks, insider trading, sure deals… Essentially, anything that sounds too good to be true, usually isn’t any good at all. People will tell you want you want to hear, they want to make a quick buck. Be realistic – high reward, low risk is practically non-existent in the world. Insider tips can happen for many reasons. Perhaps they want to manipulate the market, or just play a fast one on you – there is no reason to trust this kind of thing. Investment means you need to be smart and do your research, it doesn’t mean free money based on tips.
There is no rock bottom
Don’t make the common mistake of thinking “well if its low, it can’t get any lower”. Yes, yes it can. Or it may just get stuck like that. There is a term used when you want to build up a low stock option. It’s called “catching a falling knife”. When it gets too low, it can stay that way for a long time. You’d be better of researching better options, not hoping this one will magically resurrect itself from the ashes.
Mr. “Big-Shot-Investor” is doing it…
Just because Warren Buffet, Peter Thiel, or Elon Musk think it’s a good idea, doesn’t mean it is. Whether they promote a company or a stock, or if they are even buying it themselves, that doesn’t mean you should do the same. First of all, they may be wrong, but they simply have a much stronger safety net to fall back on. On the other hand, maybe they have other reasons to invest. Simply put, they have different resources, needs, and plans than you do, and there is no point in comparing yourself to them.
Don’t follow the herd
In line with the previous point, just because everybody’s doing it, doesn’t mean you should as well. Now, we’re not saying you should be a contrarian. That line of thought is just as lazy as trusting everything blindly. What we do advise, however, is to always think twice. Even if something seems like a sure thing, reassess your choices and plans. A buying frenzy can lead to a bubble popping at any moment, something you do not want to be a part of.
Don’t blindly trust advisors
Speaking with a professional, getting some advice, this can go a long way. Nobody knows everything, and furthering your education is always a good idea. However, blindly trusting an advisor can get you into trouble. For example, you may have reckless advisors who really like to play it fast and loose. Or, you may have one that works on commissions, meaning your interests do not necessarily have to be his. Getting a good advisor can be tough, but even if you do get a proper licensed professional, you still need to think for yourself.
Buy now now now
You never have to buy immediately. Fear of missing out isn’t only delegated to Facebook, it’s practically everywhere. And sure, if you miss out on a good deal, you may feel bad afterwards. However, know that losing your money on a silly deal will hurt even worse.
Furthermore, there is no reason for anybody to force you to invest immediately. This is a sign of a scam, desperation, or carelessness. If you truly do want to invest in a hot stock option, at least set yourself a rule – you must do “xx” hours of research before you invest. Notice we put two x-es there, not one. It’s either double digits of research hours, or go home and keep your money.
Never turn yourself into a victim. Making poor choices in life (investment or in general) can lead you down a dark, sad road. If you want to make the most out of your money, you need to be smart. Do as much research as you can, read a book or twelve, speak with competent advisors, and never charge into anything. Trust your own gut, and don’t invest blindly.