An investment is the use of money or capital to acquire goods or assets with the aim of generating income or profits in the future. Investments can be of different types, such as shares, bonds, real estate, real estate investments, among others.
The objective of the investments is to obtain a yield, either by increasing the value of the asset or by income generated by the asset, such as dividends or rent.
Most common errors in investments
Investments can be of different levels of risk, and it is important to carefully evaluate the risk and potential profitability of an investment before making a decision. That is why we have made a compilation of some of the most common mistakes when making investments.
Lack of planning and goals
Many people begin to invest without having a clear plan or specific goals in mind. It is important to have an investment plan that includes long -term goals and strategies to achieve them.
Lack of diversification in investments
Investing in a single type of asset or in a single sector can be dangerous, since if that asset or sector experiences a fall, its investment portfolio will also suffer. It is important to diversify your portfolio to reduce the risk.
Lack of knowledge
Investing in an asset or sector without understanding how that asset or sector works can be very risky. It is important to investigate and study an asset before investing in it.
Buying assets based on emotions
Many people buy active when their value is going up or sell when their value is falling due to emotions. This may be a mistake, since the value of an asset can continue to rise or fall after a decision based on emotions has been made.
Lack of patience
Investing requires patience, since assets may take to generate profits. Many people despair and sell their investments before they have had the opportunity to generate profits.
Over-appliance
The use of leverage (loan) to invest can generate fast profits, but it can also generate rapid losses if investments do not work as expected. It is important to use leverage wisely.
Lack of geographical diversification
Investing only in a country can be dangerous, since if that country experiences an economic crisis, its investment portfolio will also suffer. It is important to diversify its portfolio geographically.
Lack of investment risk control
Many people do not have a plan to control the risks of their investments. It is important to have a plan to control the risks and be prepared to act if they do not work as expected.
Lack of monitoring and review
Once investment decisions have been made, it is important to follow and review the investments regularly to ensure that they remain adequate for their goals and investment strategies. If a problem is detected, an action must be taken to correct it.