Investment mistakes can happen all the time, it doesn’t matter if you’re an experienced stockholder or a novice investor. However, there are some basic investment mistakes that are very common amongst investors.

You should try to avoid:

1. Investing Too Much and Without Knowledge

Investing is always a gamble; it is a strategic activity that requires patience and also risk. Investing too much money means that if you don’t play your cards right, you could potentially lose it all.

The key with any investment, particularly when starting out, is to start small. Invest only a small portion of the money you have (if at all) and use this to gain experience in the marketplace before you invest more.

Buying gold bullion or investing in the next big technology company may sound exciting, but investing before you’re ready can lead to some disastrous results. Many beginner investors either invest too much or fail to obtain the appropriate knowledge and training before diving into the marketplace. Those looking to invest in currencies, for example, will benefit from forex training (or similar) and will have more potential for returns than somebody simply “guessing” at the market.

2. Expecting Short-Term Returns

Any investor will tell you that investing in a long-term game is best. While receiving short-term growth and profits is possible, all investors should be aiming for long-term (rather than short-term) gains. Set yourself some long-term goals and remember that even if you lose money in the short term, it is possible to get it back over time.

3. Going at it Alone

Many investors also make the mistake of going at their investments alone, without the help of a qualified financial planner or advisor. While some low-level investments (like currency trading or low-risk, blue-chip stock trading) might be easy to do on your own, other ventures, like investing in self-managed super funds or hedge funds, will require the help of a licenced and experienced financial advisor.

4. Holding onto Losses

One of the biggest errors, particularly with new investors, is not knowing when to cut losses and simply selling off investments. Many young investors become too attached and too emotional about their investments, not wanting to “let go” or face up to the fact that they’ve made a mistake. However, failing to cut your losses at the right time can mean digging yourself into a larger financial hole.

No matter what your investments are, remember to monitor them regularly and cut your losses if your assets continue to plummet. Stop-loss orders and limits are useful in helping you minimise your risk in this regard.

5. Having no Plan

Have you started investing without a plan? A huge investment mistake is to invest in something without a strategic goal or plan under your belt. This can lead to bad decision-making, feeling lost when things don’t go your way or simply reacting to trends and short-term fluctuations without thinking about the greater implications. Make sure that you have a strategy in place for your investment; if you don’t know how to develop this, talk to a financial advisor or seek some training.