Don't let FOMO take over your investment portfolio.
We’ve all heard stories of people wanting to earn a little extra cash but not really having a clue as to what to do or even where to begin. So they turn to friends who all of a sudden become investing gurus full of the best investment advice you could possibly imagine. Interestingly, all of them have made fortunes by investing and not a single one of them knows the concept of losing money.
So investing newbies finally decide to take their friends’ advice and invest. They catch the highs and lows with almost surgical precision. The thing is, they buy when prices are high (giving in to the general hype when the only way is up) and sell when prices are low (not being able to resist the overall market panic).
Sounds familiar? Quite possibly. We’ve all been “those people” - fearful of missing the opportunity of a lifetime, jumping into investments almost exactly at their peaks (in some cases, even all-time highs), only to realise that the value of our investments started decreasing soon thereafter. Not having the patience to ride out the storm, we sold our investments, accepting our losses and the fact that we had made a mistake. But then the second blow came - the value of the assets we had just sold started to go up again. And we do another round, making the same mistakes all over again.
Since we don’t want you to make the same mistakes thousands have made before you, we want to share a few investing tips we gently advise you to take into consideration:
- Start early: remember compounding? They say a dollar saved is a dollar earned. We say a dollar invested is even better!
- Develop an investment plan: you don’t have to save for months on end in order to invest it all at once. Why not consider putting something aside on a regular basis (like monthly)? You’d be surprised how much you can save over time.
- Take a lesson from Warren Buffett’s book. One of the greatest investors of all time (hey, very few people are called “Oracles” or “Wizards” of anything), he is known for two quotes we feel everyone should be aware of when investing:
- Have realistic expectations: we’ve all heard of the 2017 crypto craze. Some of us witnessed it from front row seats. We know miracles only happen once in a while, so we advise a more realistic approach. We’ll even let you in on a little secret - if you want to have a rough idea of how much you can make by investing, you can check out the Rule of 72.
- Be patient: Tolstoy used to say that the most powerful warriors are patience and time. Crypto, much like almost any other investment, has proven time and again that it can test your nerves. We suggest you take a deep breath, think of your savings plan and relax - over time, the patient tend to get rewarded the most.
Last but not least, if we could leave you with a single valuable tip it would be to keep your emotions in check.
We’ve all been there - your mind starts playing tricks on you, taking you on an emotional roller coaster of one irrational decision after another, which doesn’t really go well with investing. We therefore suggest you stick to your plan and keep your emotions for your loved ones.
Which emotions to expect when investing? Find out here.