In his time as a financial expert, Gary Scheer has seen a lot of successes as well as a lot of mistakes when it comes to operating in the market. While the learning curve for investing can be steep, he acknowledges that many of the mistakes that new investors tend to make are common ones that can be easy to avoid if one has maintained some cursory knowledge of the market. In this article, Gary Scheer discusses some of the most common mistakes in hopes that fledgling investors can avoid them on the road to a promising financial future.
Not Being Realistic
Gary Scheer realizes that some new investors have a tendency to believe that investing will solve all of their financial problems, which is especially the case when people fall prey to investment advisors that promise outsized (and unrealistic) returns. Those investing should realize that, while occasionally low-priced stocks can turn a small sum of money into a small fortune, this is not the norm and should certainly not be your expectation when investing. Gary Scheer consistently speaks to the need for investors to be realistic as it pertains to the performance of their stocks. Realistic goals are made possible by reviewing the performance of the stock up until the present and monitoring the performance of competitors that operate within the same industry. These performances may not be a promise of your own stocks but will give you a clearer idea of the stability or volatility of the market than unclear and overly optimistic whims.
Not Having a Plan
While most have some clear goal for their investment, whether it be stable supplementary income in retirement or otherwise, Gary Scheer recognizes that some budding investors may not have a proper plan. This could prove damaging for a myriad of reasons, but one of the biggest is that not having clear financial investment goals can lead an individual to chase one investment idea after another. This leads to investing without purpose, which will indubitably make it more difficult to maintain a well-diversified portfolio that properly suits your needs. Knowing your goals is also an important facet of risk management, as knowing why you are investing and how far off you are from your plan allows you to keep track of how much risk you can tolerate while on that path.
Not Properly Diversifying
Gary Scheer and other financial experts frequently speak to how diversifying one’s investments can save them a lot of trouble in the long run. The reasoning for this is clear, if or when one of your investments drops in value, the effects will be much less drastic for your portfolio if your money is spread across multiple different types of investments. Individuals that do not diversify their investments can find themselves in hot water because their interconnected stocks can easily drop in value at the same time during a stock market dive or period of volatility.