Avoid Investment Mistakes

When you are investing money in the stock market or other financial ventures, there is always the risk that you will lose money. Sometimes this is because a stock or investment falters or fails to live up to its potential. Other times, this is because you may simply have chosen to invest in the wrong thing at the wrong time. It's possible to avoid investment mistakes, but it's also important to learn from them.

Avoid Investment Mistakes

Steer clear of startups and IPOs (initial public offerings) when you are trying to limit your risk. While many IPOs can be incredibly lucrative right out of the gate, there are often huge sell-offs after a day or two of trading. Some sell-offs can even occur hours after the stock becomes public.

Avoid the temptation to sell stocks if they falter in the short term. Many companies have bumpy patches, but they often recover nicely. Selling your shares now can eliminate the opportunity for a huge payoff later. In fact, there may be times when you'll want to buy more stock in a company if the prices dramatically drop, but be sure to check with your financial advisor first.

Try not to withdraw on accounts that carry penalties for such actions ahead of their maturation. IRAs, for example, are terrific ways to save money for the long term, but withdrawing from them prior to turning 59 1/2 years old might carry stiff penalties.

Put your money in a stable, safe, FDIC-insured investment vehicle, like a savings account or U.S. Treasury bonds. This ensures that your money is safe and guaranteed in the event something bad should happen to the market.

Invest in a company only after you have performed ample research ahead of time. Use the advice of a financial expert, but also do your own research so you can make the best decision possible with confidence. Entering into a financial agreement without being completely sure of yourself can have serious consequences.