Legendary investor Warren Buffett once said "You do not have to do many things right in life to be successful, as long as you do not do a lot of things wrong." This applies not only to life but also to the stock & cryptocurrency market. First of all making money means not losing money; most investors lose money by making traditional mistakes. If you want to be a successful investor, start with avoiding these mistakes.
Below you will find a list of the things which successful investors NEVER do. You can learn it from your own experience... Or you can take a step or 2 ahead of other investors and read this post carefully.
From today, once you have read this post, you can no longer make any of these mistakes:
Investing without a plan
Almost anyone who just does something in the stock & crypto market will at least once manage to get a profit. But without a plan, or without objectives, fate will strike sooner or later. And when this happens: It's game-over. Therefore, it is important that you invest in stocks & cryptos that suit you and in which you believe.Going all-in on 1 investment / not diversifying
Having 1 good investment can bring you to heaven and make you rich, but having 1 bad investment can ruin you and make you poor. Successful investors diversify; never put all eggs in the same basket. Diversification spreads the risk. In the long term that makes investing much more comfortable, which means you stick to your plan much longer.Getting confused and emotional by the market
The markets are going up . And going down. When it goes down, this should not confuse you. Corrections are normal to maintain a healthy upward trend. Those who sell in panic often have great regrets afterwards!Ignoring the risk of an investment
Risk is not how much money you can win if it goes right, the risk is how much money you can lose if it goes wrong. You can never ignore the risk and you need to know how much the potential return is compared to the risk you take. The main reason investors throw the towel into the ring is because the losses are higher than they expected. They can't handle the drops so they get emotional and panic-sell for example.Count on a miracle to happen
Miracles and hope are the worst counselors on the markets. Do not set unrealistic expectations. You have to start with a low return; it is easier to adjust your expectations when it yields more than expected than the other way around.Being deceived by the media
Successful investors do their homework. They know what they are doing. They are not fooled by messages in the media. When something comes in the mainstream media, the opposite is often the case. The mainstream media picks up a story only when the worst is often behind us.
For example, when the media screams about Bitcoin breaking records; you should be shorting/selling. When the media is screaming that Bitcoin is crashing; you should be buying.
Paying too much (buying high)
Many investors look at the story around a company/cryptocurrency and not at the valuation. A good company can become a bad investment if you pay too much. A bad company can become a good investment if you pay very little. The price is what you pay, the value is what you get!Pay too much cost (fees)
There are always costs associated with an investment and they can make a huge difference on your return. Every euro you pay in costs is a euro that cannot raise money for you. Suppose that person A and B invest € 10,000 over a period of 50 years with an annual yield of 8.5%. Person A pays 0.25% costs per year, person B 2%.
The difference between the two does not seem so big, but at the end of the ride person A earns more than € 6 million, while person B has to do with just under € 3 million!
- Preferring cheap investments over good investments
Appreciation is, as said, very important. But appreciation is not always everything. Some companies and cryptos are cheap for a reason and will always remain 'cheap'. The investments that make the most money are investments in good quality companies and cryptos. The holy grail is to find these early when they are still cheap!
A lot of new cryptocurrency-investors prefer to buy cheap "shitcoins" (most of the time priced under $1) instead of good coins with higher value and better projects attached. This is because they think the shitcoins will grow exponentially, but these cryptocurrencies are often very bad investments and they will only grow if the total market is growing. I'm not saying you will not make profit buying shitcoins but these investments are way riskiest.
What mistakes have you made as an investor?
We are all humans and humans make mistakes, but it is important we learn from them and improve our way of thinking. I hope this post gave you good insight on how to invest successfully. Hopefully in the future, you will NEVER make any of the summed up mistakes again!
You have been warned, be careful when investing and think before you act.
I wish you all the best and a lot of future profits!