The key is to not self-destruct

An odd thing happens when you’re financially ready to invest. Suddenly, and for no good reason, you think your money is going to double almost overnight. And with usually no investing experience, you’re liable to make many of the same mistakes that new investors often make.

Common mistakes we hope you can avoid:

Mistake 1: Starting to invest when you don’t understand how investments work. Educate yourself first.

Mistake 2: Taking on too much risk. You’re young but not invincible.

Mistake 3: Failure to diversify. With all your eggs in one basket, you could end up with a messy omelette.

Mistake 4: Having a short time frame. Don’t sit and watch your investments, hoping to take quick profits.

Mistake 5: Thinking you can do it all on your own. No one’s that smart or has that much free time.

Goals, objectives, risk

The best way to avoid these mistakes is to create an investment strategy (which is really just a fancy name for a plan). In forming this strategy, you would look at your goals (e.g. more education, down payment, travel, or retirement), your objectives (e.g. safety, income, growth, a mix of income and growth, tax minimization), and your appetite for risk (e.g. high, low, none at all), and your personal circumstances.

You can create your investment strategy with the help of a financial advisor and then review your strategy on an annual basis. Remember, as you get older and your circumstances change, you will need to adjust your strategy.