on the crypto
Even though I've been investing for over ten years now, there was a time when I was a beginner and didn't really know how to make my money work. For this reason, I had some stumbles at first. And even recently I was the victim of a mistake common to many investors. So now I share my biggest mistakes in the hope that others will not follow suit.
1. Playing it too safe
I only started buying stocks when I was nearly 30. In my early 20s, I kept most of my cash as an emergency fund. I don't regret it. But I regret having invested heavily in bonds at an age when I could have taken more risk.
Fortunately, I came to my senses and realized that despite the risks, stocks were a better choice. However, by investing too conservatively, I have lost several years of growth in my portfolio. I also realized that by avoiding stocks for fear of suffering losses, I was taking another risk: that my money would not grow fast enough to allow me to retire comfortably.
To be clear, if you are close to retirement, bonds can be a suitable investment and you may want to put them in a larger part of your portfolio. But if you are decades away from retirement, stocks are the way to go.
2. Don't diversify enough
Years ago, I was convinced that uploading tech titles was the way to go. Recently, however, I realized that my wallet was too heavy from a technological point of view.
Tech stocks are down sharply this year and so is my portfolio. The good news is that I wasn't over-invested in tech stocks, but in hindsight I realize I've invested a little too much in that industry.
Right now I am trying to avoid selling stocks at a loss and, as I have no plans to exploit my portfolio anytime soon, I hope to get through this downturn and then diversify. But I need to move some cash when the opportunity arises.
Whether you are a new investor or not, it is important to regularly check your investment mix and make sure it is diversified enough. And if it isn't, consider expanding your investment across different market sectors or buying exchange-traded funds (ETFs) for immediate diversification.
3. Try to time the market
I've written in the past that market timing doesn't work. But this does not mean that I myself have not tried and failed.
At this point, I'm not trying to grab the shares at their lowest price ever. On the contrary, I just buy stock in quality companies on a consistent basis.
While it's natural to want to buy a stock at its lowest price, it's hard to tell which one it is. It is best to use a strategy called dollar-cost averaging, in which you are committed to invest at regular intervals regardless of market conditions.
Don't follow in my footsteps
We all make mistakes, and even though I write about financial matters, I'm certainly not immune. But I share these mistakes in hopes of putting other investors on a better path.
