If you're into investing, or just starting out, then an important aspect to note are the mistakes one makes when it comes to investments.
Thus, we're dissecting the 4 common mistakes Malaysians make when the term forms a thought in the mind. Here they are.
1. Chasing quick returns without understanding the product
Do you jump into hot trends, crypto, US tech stocks, property crowdfunding or sure-win TikTok tips? If so, do you do your research?
High-return promises often come with equally high-risk, or high scam results.
What you can do instead: Check if the product or platform is licensed by SC or BNM.
Make sure you understand how the product can generate returns and what could cause you to lose money. If you don't understand it, you probably shouldn't be throwing money at it.
2. Ignoring diversification
Putting your entire portfolio into one asset, is like putting all your eggs in one basket.
All it takes is for that basket to drop, for you to lose everything you had and was hoping to gain.
What you can do instead: Spread your investments across different asset types; different regions, different industries.
3. Not having a clear goal or timeline
Are you investing for the sake of making money, without defining why, how long or how much risk is acceptable? If so, remember that a person with direction, won't know which path to travel.
You could end up panic selling when markets drop or overexposing yourself when chasing returns.
What you can do instead: Set a specific goal for yourself. For example, RM100k for a house down payment in 5 years.
Try and match your investments to shorter term goals, they carry lesser risks. Finally, review your goals yearly to adjust contributions and reassess risk levels.
4. Letting your heart do the thinking
Buying because of FOMO (fear of missing out) and selling because of F (fear), often results in buying high and selling low. This is the exact opposite of wealth-building.
What you can do instead: Automating your investments monthly, focusing on long-term fundamentals instead of daily price movements and keeping a written plan that sticks to logic.
In a nutshell, investment isn't about getting rich overnight. It's about investing time, energy and genius into something that will help your money work for you.
