Investing in Stocks For Beginners: 3 MISTAKES You NEED TO AVOID

When it comes to investing in the stock market, we've made a number of mistakes since being beginners a year ago. These are three things we've noticed ourselves doing that have led to those mistakes.

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1) The Fear of Losing Money.
This will be easier for some people to get over than it will be for others. In our case, this was very difficult to get over for Mike, because up until this point in our lives, the ONLY thing we had been doing with extra money was saving. The big pile of money sitting in our savings account not doing anything was very reassuring. Yes, it wasn’t going up in value much, but it definitely wasn’t going down. The thought of putting our money into the stock market where it would constantly go up and down in value made us extremely nervous. We were so scared that we intentionally put off investing a large chunk of money that we could have invested close to the bottom of the market last year, and it cost us around $20,000 in potential profits. And that was at our limited knowledge level back then.

Something very important to keep in mind is that any losses you see in your portfolio value are only going to be short term. If you’re investing in good, solid funds or companies for the long term, losing money is something you shouldn’t be concerned about short term. Ten or fifteen years from now, the odds are stacked exponentially in your favor that you’ll be up a lot, regardless of what happens to the market over the next few weeks or months.

2) Trying to Time Our Entry Points Perfectly.
This is something else that has been especially difficult for Mike because he tends to be a perfectionist at times, and that leads to: wanting to get the lowest and best price of the day/week/month to buy in, and trying to time the market. This has often led to analysis paralysis, and has caused us to miss out on bull runs.

3) Wanting to become a Professional Investor without Researching what we’re Investing in.
The problem with the first $1,000 we invested, was we put it into a lot of different funds and companies that we didn’t research nearly as much as we should have. Thankfully they turned out to be pretty solid, but some of the companies we initially bought into are very cyclical. They go through growth periods and periods where their stock price declines. We definitely didn’t know that at first. If we had bought in at the beginning of the downward part of that cycle, we would have seen our money going down and probably would have sold for a substantial loss. As opposed to holding and maybe even buying more shares at the bottom of the cycle, to make more money on the way up. Individual companies are a lot more risky than index funds or ETF’s in our opinion, and we probably shouldn’t have bought any initially, until we were a little more knowledgeable and experienced. The lesson here: research what you'd like to invest in. Research market trends. Get to know how the market works before thinking you can become a professional. Also, don't invest in cryptocurrency or dogecoin without knowing what you're getting into.
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