You will find that the wealth-building journey is long and full of learning. That’s why we’ve listed some extra tips that will help you avoid common investor mistakes. These are the attitudes that will keep you on the path to achieving your goals.
Don’t Settle In The Savings Account
This is the classic behavior of those who start saving money but have no interest or know where to find out about investments. Savings is easy to understand, simple and secure. But it has a serious problem: it has a very bad income.
Wanting To Become A Millionaire Overnight
It’s the kind of behavior of most immediate, anxious, and want to get rich quickly. These are people who end up falling into scams such as financial pyramids, fraud, or embezzlement because they believed they were facing a unique opportunity to earn exorbitant interest.
Put All The Money In The Bag
Not even in periods of great optimism, it is recommended to place all assets on the stock exchange. Stocks are a great alternative for diversification (not a single investment). Try to invest up to 30% or 40% of your equity in publicly traded companies, as the stock market is very subject to volatility.
Buying Expensive Fixed Income Products
Most of the fixed income products sold in banks are extremely expensive. DI funds with an administration fee of 5% per year, consortia with administration fees of 20%, pension plans with an administration fee of 3% per annum plus loading, and a fixed brokerage fee of more than $50 per order are some of them. Examples of products distributed to millions of people at bank branches. People who consume these products are leaving a lot of money on the table.
Do Not Ask An Expert For Help.
Investing in the world is increasingly complex for those who don’t understand anything and don’t even know where to start. Instead of trying to discover the best alternatives in the market on your own – often making serious mistakes until you learn -, ask for help from those who know the world of investments or visit investment website.
How To Build An Investment Portfolio?
Very well, we already know what risk and return are and how they are present in each asset class. The next step is precisely to unite these concepts and set up our” diet.”
A diversified portfolio allows your ultimate risk to be less than each class individually while maximizing the risk-adjusted return. How is this possible? Well, to answer this question, in addition to risk and return, we will need to understand what correlation is. Asset correlation is a measure of how similar these assets behave. That is, assets A and B are said to be correlated if when one goes down, the other goes down, and when one goes up, the other goes up too. When we build a diversified portfolio, we want our assets to behave very differently. Thus, when there is a problem, for example, related to credit risk, it does not affect your entire portfolio. The other assets, if they are uncorrelated, tend not to suffer.
Furthermore, for an investor, it is essential to dimension a liquidity reserve. That is a portion of capital remains and very low-risk, liquid investments to meet potential emergencies.