The Dos and Don'ts of Investing

When investing, it is difficult to decide where to start, how to make decisions. Today we will talk about investment dos and don'ts.

The Dos and Don'ts of Investing

"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."

George Soros

While investing in the financial sector, it is sometimes difficult to decide where to start and how to make decisions. Today we will talk about what experts recommend about the dos and don'ts of investing.

  • What should be done while investing?

 Assess the risks. The acceptable level of risk is various for different investors, and before investing you should decide for yourself the maximum amount of money you are ready to lose if the circumstances do not turn out as you predicted.

 Educate yourself: While making an investment, first of all, you should study, understand what kind of factors affect it, and what are important to you as a benchmark the change of which can be an impetus for you to plan further actions. Changes in the markets are quite fast, especially due to the rapid technological development in recent times, and keeping up with all of that is important to make the right decisions.

 Implement diversification. Various investment assets involve different interrelated risks, therefore investment in diversified assets is considered a good option to reduce the impact of certain risks on the entire portfolio.

 Develop a strategy in advance. A sequence of actions thought out and developed before making an investment will allow you to quickly understand the impulses and the steps resulting from them in changing market conditions. Justification of the decisions made: this is at the heart of literate investing.

  • What should not be done while investing?

 Do not follow the crowd. Following the others and investing because others are doing it! this is a common mistake. If someone else makes such an investment, this is not a guarantee that they are correct, or that investment may be a part of some investment strategy of theirs, which in your case may not produce the result you expected. Listening to others’ opinions, and discussing the consequences of the same action from different perspectives is useful, but investments should be made based on one's own judgment and strategy.

 Do not solely rely on probability. Treat investments professionally. At the base of each movement are motivations: geopolitical, economic, psychological, or other, as a result of their in-depth study, it is possible to make well-considered decisions.

 Do not make emotional decisions. Our decisions are influenced by various factors, and it's hard not to give in to emotions and act out of our fears or anger without a pre-planned strategy. While making investments, you should put your feelings aside as much as possible and think soberly before taking any step.

 Do not invest the last money. Investing with money that is intended for current expenses will add emotional pressure to decision-making, which will often prevent you from making rational decisions.

And it should be remembered that each of us invests in our own way, according to our needs and vision. The independent, thoughtful, well-founded decisions and constant education can bring the expected result from investments.

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If you missed our previous blog, be sure to read it and learn more about investments and EvocaINVEST.

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