Top 5 Things To Watch Out for When Getting Started in Investing

1 Do Not Listen to Hot Tips from Friends, Family, and Co-workers

Never, and I repeat NEVER buy or invest based on a “hot tip” or what someone tells you. This is one of the fastest ways to lose all your money. Take the time to learn about a strategy and know how to identify buy and sell signals.

Learning about a strategy is really not that hard if you take the time to learn it. If it does seem too hard and difficult, then that is probably not the strategy for you. Don’t worry, there are many many legitimate opportunities out there to make passive residual income.

2 Watch Out for Strategies that Guarantee FAST and HUGE returns With Very Little Effort.

While it is VERY possible to make some quick and fast returns with little effort, this is relative. I have written about a few legitimate passive residual income strategies (options trading, making money online) in some other articles, but it does take some degree of knowledge, time and/or skill, and there is some risk.

Making money legitimately will require a decent investment of your time OR your money.

If someone tells you there is NO WAY YOU CAN LOSE and you won’t have to do ANYTHING, then they either don’t fully understand the risks of that strategy, or they are lying. If you hear that phrase take your wallet and run for the hills!

3 Do Not Invest Your Hard Earned Cash Without Doing Your Research

This should go without saying. Many people give their money to so-called EXPERTS without knowing how this expert is investing their money. This is another quick way to get roped into a scam such as a Ponzi scheme, or one of those get-rich overnight strategies that never work.

Know the risk/reward ratio of any money making strategy you get into. Also, understand how it works before you invest your hard earned money.

4 Do Not Act Without having An Exit Plan

An unwritten plan is hard to follow. It will be very hard to stay disciplined and consistent when you are being controlled by your emotions.

Ideally you should have a written plan or set of rules for your strategy. List things like when you will cut your losses, and when you will take profits. Do NOT act without establishing goals for what you want to get out of a particular strategy. This will also be a great way to track your progress and learn from your mistakes.

5 Do Not Spread Yourself too thin

Everyone has heard that it is important to diversify and it is bad to put all your eggs in one basket. Well, what it you only have one egg?

Warren Buffet, one of the richest men in the world had a response on diversification. “put all your eggs in one basket, but watch that basket carefully…”

If you don’t have a lot of money to invest don’t spread yourself too thin by trying to become a jack of all trades. Concentrate all your time and energy on one investment strategy, become an expert in one strategy and then consider adding more strategies once you have more money.

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