Pandemic or Not, You Can’t Predict Bubbles, So Stop Trying
Will the pandemic continue to rage and cripple the global market? Will, we hit a tech bust? Will Tesla shares and stocks, in general, come spiraling down? It’s certainly possible, but these examples showcase the fact that even the experts can’t predict the financial future. That means we – normal humans that we are – can’t either.
If you are thinking to start investing during the current stock market crash, here are a few mistakes I would like you to avoid:
- Don’t buy stocks of the companies you know because they seem “cheap.”
- Don’t follow your friend’s advice if you don’t understand what you are doing and how they do it
- Avoid cryptocurrencies and forex exchange if you are not a professional
- Don’t buy investment funds from your bank in order to “just to do something quickly.”
So what does it mean to invest wisely? Investing wisely means:
- Build a rainy day or emergency fund before you start investing. Ideally, this fund should cover six months of your expenses.
- Buy a home when you are financially ready to buy a home… not based on the market.
- Invest in a diversified portfolio that balances risk based on your tolerance.
- Invest in your retirement as early as possible and shift to lower-risk vehicles as you get closer to retirement age.
- Historically, the stock market has always rebounded, so never try to time the market.
- Don’t try to pick individual stocks unless you are willing to lose your money.
- Ignore fancy investment tricks, like shorting stocks, unless you are willing to lose big.
- Develop no-thought saving habits, such as automatically deducting a portion of every paycheck and putting it into your retirement account.
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