The decision to invest is one most people don’t regret making. There are multiple benefits to investing a portion of income in various money saving (and earning) pursuits.

Your current lifestyle often provides a good baseline for your eventual retirement goals.

Investing helps you save money before you even see it. This is especially helpful if you have a hard time holding on to money. This setting aside a portion of earned income per month in investments can lead to potentially huge returns over the long run.

The trouble is the flip side of good investment is bad investment. It’s a fact that if you make bad investment decisions the results can be catastrophic. You need to know what you’re doing if you’re going to experience positive results.

There are a handful of mistakes newbie investors make that are easily avoided by more proficient investors. Below are 3 common mistakes and how to deal with them.

1- Selling too Early

If you know anything about making good investments, you know that not sticking by your investments is a huge mistake.

I can see why it happens to beginners though. Investing hard-earned money and then not seeing returns for a while can get very frustrating.

And oftentimes, you might actually see the shares start to fall and that frequently leads to people panicking and selling without hesitation.

This is the wrong way to go about it. You’re never going to be able to effectively predict the market yourself so it’s better to do research into which companies have the best track-record.

Statistically, the rate of ROI works well in your favour long-term as long as you are willing to be patient with it.

The solution to this problem is actually really simple. Just plan ahead of time and invest in the right shares, and then don’t back out.

Stick by the choices that you made, no matter how frustrating or scary it gets

2- Not Investing Enough

The fact is, investing just a little bit of cash every once in a while is not going to get you anywhere.

You need to fully commit to a set amount of money every single month and it needs to be substantial enough for you to actually see some profit if things work in your favour.

You can either hang onto as much of your cash as possible or you can make some valuable long-term investments.

Again, this part of it isn’t easy. You will most likely have to make a few sacrifices. I’m not suggesting that you invest every cent you have, but think about what’s worth more to you.

If you’re not willing to make a few difficult decisions then investing just might not be for you. With a bit of self-discipline though, this is not the hardest thing in the world.

If you’re particularly concerned about being out of pocket, you could focus your investments on companies that offer high-yielding dividends.

These stocks will ensure that you do gain some consistent income as the companies offer all of their investors a share the overall profits.

It will definitely be tough to begin with, but make sure that you are willing to put a significant portion of your income into your investments.

3- Not Paying Attention to Tax Implications

There’s going to be tax implications with every financial decision you make, and investing is no exception to this rule. Once again, this is something that it’s probably a good idea to familiarize yourself with before you make any decisions on building a portfolio.

If you’re investing for your retirement, you’ll have to make a decision on whether you want to pay taxes while you invest and withdraw everything later, or pay once you retire.

You also need to pay attention to the time periods during which you buy and sell as you could have a higher tax bill if it all takes place during a single tax year.

There are many  different tricks you can learn that make you a tax-efficient investor.  It also might be worth your time to speak with a financial planner.

There are tax professionals who dedicate their time exclusively to helping people like you keep track of taxes. This is a good way to go if you’re uncertain.

No matter how you go about it, not paying attention to tax implications of investing will just cause you problems later on. So keep an eye on it.

Conclusion

Like any financial endeavor you undertake, there’s always potential for pitfalls. And they could become serious if you don’t know how to deal with them.

Ensure that you know what these pitfalls are and how to prepare for them. If you’re ready for the problems and know what to do to prevent them, your investing career should run smoothly.

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