Investing really isn’t all that hard. And then social media comes along and every finance content creator wants to shout their opinions into the void. Suddenly the inexperienced investor is getting screamed at by dozens of “experts.” This is the best way to invest! NO! THAT IS THE BEST WAY TO INVEST! Don’t buy THIS stock, buy THAT stock! Don’t buy ANY stocks! Buy a duplex and rent out the other side! DON’T BUY REAL ESTATE! YOU’LL BE AN EVIL LANDLORD!! Convert your garage into a Bitcoin miner!!
Suddenly, the inexperienced investor gets analysis paralysis. What to do? What’s right? What stock is the BEST stock? The CHEAPEST stock? The highest dividend paying stock?! Which growth stock will go up the most and THE FASTEST?
They agonize over every bit of information and ultimately … never invest. Or they invest in something until another creator says that particular investment is no good. Then they panic and sell it to buy something else.
It can be EXHAUSTING.
Here are five investing mistakes beginners make:
They lack research and planning. Investing is a long game. Pick a few ETFs. Add to them consistently over time. Be patient. It’s not hard.
They try to time the market. The most frequent question I get is: When is the recession going to happen? Oh, like, lemme just open up my calendar and let’s seeeee … ummm … Tuesday at 3pm? Nobody knows. And it doesn’t really matter as long as you ::drum roll:: have a plan to stay consistent and invest monthly. You’ll buy when markets are at all time highs. You’ll buy when it pulls back. You’ll buy when a recession hits. You’ll buy when stocks go higher. 30 years from now, it will be extremely unlikely to have a net loss.
They lack diversity. Whenever I make a video about dividends, I get tons of hate comments like, “Why would you invest in something that pays 3% when NVDA is up SO MUCH!! 🤡 “ The reality is, a diverse portfolio can insulate your portfolio. Growth for bull markets, dividends for passive income. Compound ove time and you’ll be glad you have both.
Emotions get in the way. Just because you love a company does not always mean it’s a great stock. Just because a stranger on the internet gave you a hot tip does not mean the stock is going to rocket and you’ll be able to quit that soul sucking job. The lousy investment you picked needs to be cut before the loss gets worse, but YOU researched it! YOU picked it! YOU can’t be wrong!
Ignoring Fees. Most major ETFs have very low fees these days. I see so many people agonizing over a 0.02 % and 0.03% fee. The reality is these agonizing debates are a giant waste of time. On a $10,000 investment your fees are $2 or $3. Don’t lose sleep over that. Any fee over 1% is generally considered high, although some more niche focused ETFs will have higher fees.
A few great options for new investors are:
S&P 500 index funds like SPLG, VOO, or SPY. You only need one.
A tech focused ETF like XLK, VGT, or FTEC. Some people prefer others like SPYG or QQQM.
A dividend ETF like SCHD, SPHD, or SPYD.
There are others - these are all the most popular. You only need one of each.
Comments