Many people think that investing is all about going in and putting money and expecting to make lots in return. The lure for quick money has made people start investing before they equip themselves with enough knowledge to understand everything that goes on in the investment markets.
You need to realize that investing means ‘beating’ the market because you look for situations where you can make money when the market conditions are right. Getting to that point when you know you should make an investment requires knowledge and passion, otherwise, you will not make it in the field of investment. To succeed, you have to participate actively.
There are certain conditions that are not good for investing and these include:-
When you need quick money
While there are short-term investment options available, there is no guarantee that you will make money. If for example the plan is to buy a house in the next two years and you decide to invest in stocks, it is impossible to predict whether the market will remain stable within those two years, so that you can make money. Be realistic about your expectations to avoid disappointments.
If you do not have a passion to learn.
To succeed at investments, you have to be someone who is not afraid to learn. While we are in no way saying that you should become a financial expert if that is not your field, you, however, need to constantly update yourself about the investment markets and this requires a yearning for knowledge.
If you do not have a risk tolerance.
Investing means that you have to have a very high-risk tolerance. If you do not handle pressure well, investment will drive you to an early grave. There are many online tests that you can do to check what your risk tolerance is, If you find that your risk tolerance is very low then you may want to reconsider investing. To invest, you should be able to lose money and not panic when it happens. Mitigate against this by having a clear understanding of how investments work so that you can make the right decisions.
If you buy because the prices are cheap.
Before buying stocks or shares that are lowly priced, you may want to find out why the prices are that low. It could mean that the company is in trouble and are trying to get people to bail them out by raising money quickly by pricing their stocks low. Have this knowledge before you make a move because you may end up not making any money eventually. Make sure you understand why you want to invest in that particular vehicle and if you cannot answer the question of why then do not do it.
Do not fall into the pitfall of thinking that investing is all about making money, while this is the main goal, you need to realize that there are so many other things you need to take into consideration so that you make the right investment decisions.