Having proper mindset when investing allow investors to obtain a realistic perspective of their investments. Due to misconceptions about investing, some investors may be disappointed when their expectations and needs are not met. Investors who have a realistic expectations of their investments are more likely to achieve their long term financial goals.
Below are several misconceptions about invest8ing which investors should be aware of in their investment:
i. Quick Gains
One of the biggest roadblocks in achieving the successful of long term investing is impatience. Investors need to remind themselves that investments are for the long term mostly. As such, gains made from investing may take some time to be realized. Impatience investors, in their quest to chase returns, may not give their investments enough time to perform adequately.
ii. Mismatch of Risk Profile with Financial Goals
Matching your investment risk profile with your investment objectives is an important determining factor for investment success. Investors need to first identify their risk appetite before a suitable portfolio can be built. By identifying the level of risk that they are comfortable in taking, they can then decide the types of funds that are appropriate for them.
However, a moon mistake that investors make is not assessing their risk profiles properly. Because of this, investors tend to make investments that do not match their actual risk profiles. For example, for conservative investors, their primary goal would be to achieve regular income. A s such, they should not select those aggressive investment.
iii. Expectations of Fixed returns and Past Performance
Compared to savings and fixed deposits, investment mostly can’t guarantee investors fixed returns. Its performance depends on investment portfolio as well as prevailing market conditions. In addition, historical returns do n jot indicate future returns as market conditions may change over time.
In conclusion, holding their investments for a sufficiently long period, understanding risks and returns of their investments, as well as having clear goal are positive steps toward achieving their financial objectives. It is advisable that investors strategise and plan ahead for their financial goals. In doing so, they ca have proper mindset for investing and be able to establish a realistic perspective of their investments.