Why is investing money difficult?

Earlier we saw about some of the basic tips that would help to kick start the investment dream of any person. However simplified the basics maybe, most people still find it difficult to invest their money – may be because they are not completely aware of its benefits, they are not sure about it, or they have trouble finding the right options to invest. What could be the reason that people either don’t invest or they are not able to successfully invest? Here are some things that could be the reason why people refrain from investing their money.

The fear factor

This is the most important reason that keeps people away from investing money. The “fear” of losing money makes people opt out of investments. The high risks, the fluctuating and volatile market are things that create fear in people’s minds. Most people think that it is better to keep their hard earned money safe rather than investing it to yield high returns and then stand to lose it. However, as long as a person does proper research and invest their money and allow that money to grow over a period of time, any investment can definitely fetch good returns. Even if there are any changes in the market, you can either allow it some time to come up or channel your invest into other options which will compensate for the loss.

Overconfidence

For some people, it is their overconfidence that makes them lose money with their investments. When people happen to get some positive results with their limited knowledge about the market, they consider themselves to know everything and they start investing without proper research or advice. This will definitely end in them losing their money.

Not reviewing

People think that it is enough if they manage to make a few successful investments. They forget about their portfolio and fail to revisit it regularly. If you do not revisit your investments regularly if not often, you will not know which ones are doing well and which ones are doing not so well. You will have to make changes to your portfolio accordingly to balance any losses that you might have incurred. Failing to do this might even eat up all the profit that you might have made with other investments.

Starting at the wrong time

There are instances where people resort to investments at the last moment thinking to make huge returns in a short time. Especially when you are nearing your retirement, you must limit your exposure to the high risk involved investments. Also, you must remember that investments need time to grow and it is not always possible to make huge returns in a short span. Investments need to be done after proper research and for the long term.

Not taking into account diversification

When it comes to investment, one of the main factors is diversification. It is important to invest your money in a mixed portfolio. You should make sure to invest in different options. For example, if you are investing in mutual funds then you should make sure to invest in equity, debt, and mid-cap funds and not concentrate on just one fund.

Not approaching for help

It is always best to take advice and suggestion from professionals in the field. It is not possible for everyone to spend the time to do the required research or even if we spend that time, it is not possible for everyone to understand the details of the market when it comes to investing. So, it is always advisable to get help from your financial advisor or a professional before you start investing.


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About the Author: Anant G Bhatavadeka

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