Between risky investments and cognitive biases, yield or debt: the obstacles to avoid are many and varied. Investing should not be done haphazardly: investing should be done thoughtfully. If you make investments, it is essential that they are linked to a well-defined project. To optimize your investments, discover the mistakes not to make when you want to invest your money.
The investment must be made without debt, especially at the beginning. Indeed, if you opt for a loan, you restrict your investment possibilities and your borrowing capacity is blocked. The latter must be saved for your real estate investments.
We recommend that you don’t invest a lot but often, instead invest a large amount that you don’t have and then nothing. Compared to an investment, the importance is the recurrence of your investments: this offers you the possibility of making the adjustment in real time or making your choices and investment strategies according to changes related to the market or in relation to your needs. . Another plus if you invest little but regularly: you will benefit from the snowball effect of compound interest.
On top of that, if there are major losses, you won’t be in a bad position. You have to ask yourself the following question: how to repay the monthly payments of your loan if your investment does not earn you enough? Among the 6 most common mistakes, this is obviously the most dangerous when you want to invest your money. Be vigilant and reflect before investing!
A consistent return is a carrot for the investor whose main goal is to make his money work. However, this is insufficient for a successful placement. Indeed, you must ask yourself the right questions before investing: is the disclosed return guaranteed? Is it spread over a year or two? Is it linked to the performance of the past year? Will a change in the law have an effect? All of these questions are necessary in relation to wealth management.
Indeed, the percentage of return revealed by a broker or a management company is not relevant if it is not used in a context and taken with hindsight. Multiple and varied aspects impact this rate of return. The main ones are the management fees and the taxation in force.
Focusing too much on performance is a real obstacle for you. Indeed, this degrades the evaluation of these variables. In theory, a rate between 1 and 3% may seem low, but take into account that this figure over the long term and active for substantial investments can positively impact your return! Consequently, an investment of one million euros which reveals a return of 8% kept for thirty years conceives various and varied incomes according to the threshold of the management costs. Here are the figures obtained compared to a rate of 8% over 30 years for one million euros:
Thus, you can see that the difference turns out to be almost 100% between a rate of 1% and 3% management fees per year. Remember to integrate the specific taxation in relation to the product and taking into account the context.
Last point: a substantial return, located beyond a bar of 5% or 6%, is often linked to a major level of risk. And depending on your profile, you certainly don’t have all the weapons to set off on this type of adventure. Keep in mind that there is no return without risk. Among the 6 most common mistakes when you want to invest your money, this one is the one you least suspect!
A qualitative investment is essentially linked to a plan. Why do you want to invest? About your future retirement? In relation to the financing of your studies or for your children? To generate passive income? In order to design a heritage for your loved ones? Depending on the answers to these different questions, your decisions will not be the same.
If you choose to invest “blindly”, you risk experiencing disappointment since the alignment of your investments will not be made with your needs. It will be necessary to shape an effective, relevant and planned strategy. In this approach, it is possible to benefit from the know-how of an expert such as a broker or a wealth management advisor.
Determining your goals gives you the opportunity to understand your risk profile, which is simply essential before venturing into the stock markets: do not attempt trading if you are the reluctant type!
Many people tend to confuse guaranteed and secure investments. Moreover, this is one of the 6 most common mistakes when you want to invest your money. Indeed, the first is related to an investment for which you have the insurance of all of your savings. You should know that France is the only international country to offer investments with guaranteed capital. Indeed, this normally concerns all of the following: passbooks A, LDD as well as savings books. These allow you to earn little, but your money is protected as long as the group hosting them has a positive solvency ratio. In any case, know that these different tools are safe financial investments presenting no danger.
Security is based on the study of the liabilities of an investment. On the stock market, these are assets whose underlying has the following qualities: stability, robustness, tangibility and durability. Know that gold or real estate are reliable, relevant and secure investments.
This is a mistake that many people make. If you try for hours to understand how your investment works, it is far from positive. In order to be profitable and successful, it is necessary that the investment concerned be simple and quick to understand.
At the same time, if you are unable to understand how fees work in connection with your investment or how compound interest works, do not hesitate to get help and ask questions. Investing wisely is key. There must be no doubt about the investment in question. Also consider moving towards a stable investment. To avoid this mistake, one of the 6 most common mistakes when you want to invest your money, opt for diversification.
This is surely one of the most common mistakes. Whether it’s booklets, assets or complicated products to unlock, we do not recommend that you go for a single type of product even if it is extremely attractive. Your wealth management strategy must be as diversified as possible. Remember to multiply the sources of investment because this gives the possibility of optimizing the potential of each product, but also of restricting the dangers encountered. Where to put your money? Preferably on different media, while finding a happy medium!
Find a happy medium. By confining yourself to your investments, you are not optimizing your money. Now you know the 6 most common mistakes when you want to invest your money.