Investing can be lucrative career, part-time hobby, or means to acquire capital for retirement, but there are laundry lists of mistakes one can make while doing it. And anyone can make these mistakes, whether they are super rich or just getting into the industry.
While there are many other ways to avoid investment mistakes this article will focus on a single, easy to follow strategy to avoid investment disaster.
Spread Your Portfolio
In a survey conducted by the deVere Group millionaires cited a failure to diversify their portfolio as their highest investment regret. So even if you’re sure you’ve got a good thing in a single sector, or worse a single stock, spread you investment around. If you already have invested in EFTs expand into stocks and bonds either individually or in a mutual fund. This type of investment is typically worthwhile and (barring a complete economic collapse) a fairly safe place to put your money.
If you’re feeling a bit adventurous invest in hard assets such as precious metals or real estate. Gold for example is considered to be a solid hard asset investment particularly to those of the Austrian school of economics. However it is worth considering that the price of the coveted yellow metal has fluctuated violently over time. Also this fluctuation has had different end results depending on the currency you wish to look at.
Compared to some currencies the price of gold has generally increased while taking a nose dive in others. There are a variety of pros and cons to investing in gold as well as other precious metals and its justification is up to each investor.
Real estate is another good hard investment to make, but not without its risks as well. Many risks associated with real estate is contextual, for example owning an apartment complex can yield significant and almost immediate returns. However this can backfire if the property is damaged by destructive tenants or neglected by the property manager. Also the recent housing bubble and bust should give one pause before buying up properties willy-nilly.
There are good reasons to buy real estate, though. Estates are a finite resource but can be modified any number of ways by the purchaser and has a strong tendency to (usually) increase in value. Further most millionaires as well as the moderately wealthy either own property or are investing in it with gusto this year. As well as the US, London properties are being snapped up by foreign investors, the Chinese have been really busy there.
A final, and often over looked, investment is cryptocurrenies like bitcoin. Much like gold, Bitcoins price has peaked and fallen although on a much faster timescale, but some backers in the digital currency insist it will bounce back and increase in value as well as popularity.
This does seem likely considering the currency is now being accepted by major businesses such as Overstock.com as well as Subway and CheapAir.com. Further the currency is designed to be deflationary meaning it isn’t prone to devaluation due to the meddling of central banks.
However regulators argue the currency should be avoided until government controls are put in place citing the risk posed to Bitcoin users after the infamous collapse of Mt. Gox and government crack down on Silk Road.
But Tim Draper, American venture capitalist was the sole winner of 30,000 Bitcoins in a US government auction, proceeds from the raid. The Auction took place on June 27 which attracted 45 bidders. It was the federal agency who made the announcement of the sale that lasted twelve hours and attracted over 60 bids.
At the start of July, the value of the stash was estimated at almost $20,000,000.