Before you begin investing, you might be worried about making mistakes and losing money. I know I was, but I decided at some point I’d have to bite the bullet and just get started.
I started small and with money I could afford to lose (though obviously didn’t want to lose). I have made a few mistakes that I’ve shared below. You’ll see they’re not worth avoiding investing for but hopefully you’ll be able to avoid them.
Mistake #1- Investing in a gilts fund
My first 2 investments were in a UK FTSE 100 tracker fund and a 10 year UK government bonds (gilts) fund. I chose the gilt because I was nervous of investing and gilts are talked about as being low risk. I didn’t understand that they were bought and sold at different values.
The thing is, my retirement age is 30 years off. It would be awesome to be in a position to retire early, but if I need to work, I’ve got a lot of life left in me (hopefully!) So I can afford to take risks, especially as I used a ‘small’ tester pot of funds to learn with.
I decided to sell at a loss so that I could transfer the money into something with some actual potential. It was a lesson well learned and a good move to make! No gilts in sight in my Stocks and Shares ISA anymore!
Mistake #2- Human error!!
Owing to the fact that I am an idiot, my second error was accidentally picking the wrong fund in a drop down list. It’s too long ago to remember what I had been intending to choose, but after the panic subsided I realised I’d inadvertently diversified my portfolio and at the time of writing it’s this US focussed passive fund that has made me the biggest gains. 🙂
However, it could have gone the other way, so just be doubly sure you know what you’re selecting before you hit confirm!
Mistake 3- Choosing the popular option too late
When I started investing, biotech funds were all the rage. They’d returned 30+ percent for 2 consecutive years and I figured I’d be chuffed with even half of that. I should not have just gone for something that had done well in the past. Sure, it could have paid off, but unfortunately it plummeted just after I’d purchased. 2 years later, it has made a small return so holding on can work out well in the longer term. I would have been better putting a smaller chunk of money into this fund, rather than seeing pound signs and getting greedy!
Mistake 4- Dilly-dallying
I had my penny drop moment about investing around 2 years before I got started and lost out on a lot of growth over that period. I’d love to say I should have started 5 or 10 years ago but sometimes it takes time to recognise the right route. Once you’ve recognised it though, it’s best foot forward along the path. The sooner you start the journey, the longer period you can benefit from the stock market.
Was it worth it?
You betcha! Don’t get me wrong, going in gungho can lead to much bigger mistakes than I’ve made. But if you take a measured approach, take it one step and a time, avoid the pitfalls (or climb out of them quickly!) along the way, I’m sure you’ll realise it was worth it too.
Where are you on your investing journey? Have you made any big mistakes? What cautions would you give a newbie investor?