Top 3 Investing Mistakes to Avoid
All of us on @steemit have different investment backgrounds.
I personally started investing in my late teens at 18 years old. I started by investing in the stock market and later invested in real estate, but I made mistakes. I made mistakes when I invested in stocks (late teens), and I made mistakes when I invested in real estate (mid 20's to Present).
1. GOING 'ALL-IN'.
Contrary to what many believe in the crypto-currency space it is not advisable to go All-in, in any particular investment, or even in an investment class.
Going All-in at any moment in time will prevent you from being able to average down if prices in that particular investment fall, and it can also place a burden on you mentally and emotionally - @exyle has mentioned this in his posts and it is something I am familiar with.
When a person's entire net-worth, or even anything close to it is tied to a single investment, the price swings create stress to such an extent that it becomes difficult to think about anything else, and a 10% to 50% loss can seriously harm a person, mentally, and emotionally.
In order to prevent this, I am only investing a minimal amount in Steem. It is still a good amount based on my income and savings but it isn't enough to make me feel or go crazy over a paper loss, even if the loss reaches 75% to 95%.
2. GOING ALL-IN, ALL AT ONCE.
This is another mistake I made in my late teens and I think a lot of amateurs and inexperienced investors (or speculators) make this mistake.
When you go all-in, all at once, or even invest everything you are willing to invest all at once, you remove the ability to average down and buy lower if prices fall. This is especially true when you are investing in a stock or cypto-crytocurrency that is possibly bottoming out (i.e. Bitcoin), but could go lower.
One of the reasons why a 50% to 95% paper loss in Steem wouldn't affect me much is that I believe in the technology and I can continue to purchase a set amount AFTER prices fall 50% to 95%. I'm not saying that will happen but no one knows what will happen. I still have the temptation to invest more all at once but @emaferice actually helped me with this since she is more risk-averse than I am. Sometimes having a financial adviser, or even a spouse to run ideas through can prevent us from falling into the hype that traders call FOMO (a.k.a. Fear of Missing Out).
3. Under-estimating the maintenance requirement.
This mistake applies to the real estate I invested in while living in the Philippines. Real estate is different than stocks, since it requires maintenance. Air conditioners, roofing and in the case of houses in the Philippines, even walls can break or crack and deteriorate.
I under-estimated the maintenance required for real estate and since I am poor at maintenance, I suffered the consequences.
In order to avoid maintenance, I have chosen to avoid investments that require maintenance, excluding their tax requirements. Tax requirements is the one thing that we cannot avoid but aside from that, investing in Steem doesn't require maintenance. I hope @emaferice will remind me to avoid real estate since I love real estate but I lack the ability to maintain houses and/or condominiums.
So that's it. Those are the top 3 investment mistakes I made in the past and I want to rectify those mistakes in the present. If you have any other mistakes that you think should be listed here, comment below, and let me know if you agree with me... or not!