Do-it-yourself investing has become a popular way for individuals to take control of their financial future and grow their wealth – however, it’s not without its risks. Making even a small mistake can be costly, which is why understanding the most common missteps amateur DIY investors make is essential to ensure long-term success in the stock market. In this post, William Schantz takes you through some of the potential hazards that can arise when investing on your own so you know what to look out for before taking the plunge into DIY investing.
William Schantz Lists Costly Mistakes DIY Investors Make
DIY investors are an increasingly popular group of people who are taking their financial futures into their own hands, says William Schantz. However, as with any type of investing, there is a risk that mistakes can be made, and costly errors can have serious consequences. Here are some of the most common mistakes DIY investors make and how to avoid them:
1. Not Diversifying Investments: One of the biggest mistakes DIY investors make is not diversifying their investments. By putting all your eggs in one basket, you leave yourself exposed to potentially significant losses if something goes wrong with that particular asset or sector. This is why it’s important to spread your investments out across different asset classes – from stocks and bonds to real estate and more – so that if one part of your portfolio takes a hit, the rest of it can remain untouched. According to a recent survey, 74% of DIY investors had not diversified their investments and were at risk of losses from market volatility.
2. Investing Too Aggressively: Another mistake that DIY investors make is investing too aggressively. It’s important to remember that there are different levels of risk when it comes to investing, and if you’re not careful, you could end up taking on too much risk for your financial situation or goals. If you do decide to take on more aggressive investments, it’s important to make sure that you have an adequate emergency fund in case things go wrong. A study by the National Endowment for Financial Education showed that only 25% of DIY investors had a risk tolerance plan in place.
3. Not Paying Attention to Fees: DIY investors also need to be aware of the fees associated with investing. It’s important to understand all the costs involved, including broker commissions and mutual fund management expenses, so that you can make sure you’re getting the most bang for your buck. According to a survey by Investopedia, over 50% of DIY investors were unaware of the fees they were paying on their investments.
4. Ignoring Financial News & Advice: Finally, it’s important, as per William Schantz, for DIY investors to stay informed about what’s going on in the financial markets and take advice from experienced financial professionals. This will help you stay on top of market trends and avoid making costly mistakes. A study by the National Financial Educators Council found that 72% of DIY investors were not taking advantage of expert advice or staying up-to-date with financial news.
William Schantz’s Concluding Thoughts
By avoiding these common mistakes, DIY investors can ensure that their investments are working for them, not against them. According to William Schantz, with a bit of knowledge and research, it’s possible to make smart decisions that will pay off in the long run. Take the time to learn about investing, diversify your portfolio, and pay attention to fees and advice – all steps that will help you become a more successful DIY investor.