Ways You Can Miss Your Investment Goals

Your stock market assets have the power to help you reach your financial goals if you’re keen enough not to lose sight of those goals. However, many investors still fall through the cracks because of the following:


You Have No Specific Goals

Saying you want to have $1 million dollars for retirement or have enough to buy a condo aren’t goals, they’re results.

What you must have is a quantified investment plan where you’ll have a set amount within a certain time frame.

For example, if you say that you want to raise $100,000 within seven years to make a down payment on a condo, that’s a specific goal.

Unfortunately, when you don’t have any specific goals, you end up falling into the following pitfalls:

  • You won’t know when to re-balance your portfolio or change your investment strategy to reach your goal.
  • You won’t be able to make investment decisions clearly because without clear goals, you won’t know whether to choose blue chip stocks, high-yield bonds, or any other investment product.
  • You won’t be able to evaluate risk properly because if you have no specific long-term goal, you might make greater gambles (and losses) with your investments.

Investing With No Savings

If you invest with no savings, or worse, invest your savings, what happens when you have an emergency? If you need cash, you’re down to either selling your investment assets or using loans.

If you take loans, you’re actually derailing the purpose of investing, because the 9% you’re making from your Exchange Traded Fund (ETF) won’t compare to the 24% interest rate of a credit card.

Ideally, you should work towards building an emergency fund of six months of your income. That way, if you ever need to liquidate your assets in an emergency, you won’t be forced to sell your investments at a loss.


Not Monitoring Your Investment Products

At your job, chances are that your employer has some key performance indicators (KPI) that you must meet in order to justify your salary. You should take the same approach with your investments.

For example, if your investments have to generate at least 7% in annual returns to meet your goals and your investments aren’t making the grade, that’s when you should swap out those under-performing stocks for better ones.

You should check your investment products often. Otherwise you’ll risk losing more money in the long run by holding on to stocks that are continuously losing money.


Mistake Financial News for Financial Advice

Financial news is just news. It should never take the place of sound financial advice. Remember, the news follows the stock market, not the other way around. That means that by the time you hear positive or negative news about various stocks, bonds, etc., the changes have already happened.

So when you hear about a stock’s rise on the news, chances are good that by the time you check it out, you’ll be buying high. Also, be wary of free newsletters or magazines that advertise investment products that you should invest in. Such information is never given away for free.


Becoming Impatient About Your Investments

There’s no such thing as getting rich “quick” in the stock market. Many strategies that work such as sitting on blue chip stocks or buying index funds are too boring for novice investors who like to “time” the market and make fast trades.

This can generate money faster, but it will also lose money faster. To win at this game, you need to guess correctly on when to buy, and when to sell. It’s like playing a game of chance involving the flipping of a coin. To win, you need to correct guesses in a row.