A big investment pitfall can be summed up in one word: greed. A major challenge when investing in stocks, ETFs or mutual funds is to remain with a working system, a methodology that produces results.
Too often new or even experienced investors get caught up in the “investing game”, the hype about what can be, the success story flowing from some sensational, but self-promoting newsletter or advertisement. There are dozens of ways to invest in the markets, not just stocks or ETFs or mutual funds, but using options or margin, buying and selling commodities, are amongst the many.
The key, as I have previously written, is to learn what suits you best and then to stick with it. Find a software program that works for you, based on your available time and the amount of risk you can afford.
Too often situations crop up that tempt you to sway from your path. These temptations can be:
• A friend telling you about new ways to invest money
• Volatile markets in which you aren’t recording gains but advertisements make it seem like going a different direction will make you bundles of dough
• Publicity and reports about new trends, like technology or foreign investments that tempt you to change course or even abandon your present methods
This doesn’t mean that there are not other methods to investment your money; it just means it is not a simple as the promoters or friends make it out to be. Switching tactics takes time to properly figure and evaluate the best tactics. Switching to totally new types of investments or investing styles can involve weeks and months of learning and studying.
So the question becomes: is it worth the time? Are the tradeoffs worth it?
If the methods you are using for investing are not working when everyone else is making money then, yes, you need to re-evaluate. But if your current methods do work, then perhaps they just need to be tweaked to make more money or perhaps the grass is not greener on the other side of the hill and you should stick with what you have.
If you are not satisfied with the results of a particular software program or you must work to make it work with your lifestyle then, yes, start looking for another investment software program. Don’t be afraid to contact your current software provider or any new one to see if you can do better with the program; in other words are there ways to boost performance that you may not know of but the authors are willing to share?’
Simply switching to new ways or places to invest can cost you money because of lost time and investment losses while you are learning so proceed cautiously and ask lots of questions.