Avoid These 4 Investing Mistakes in Your 20s
Suffice to say you surely already did some of these mistakes — if you aren’t unconsciously doing them still. Nonetheless, you should be aware of them, hence this article.
None of them are permanent, so you can still get the upper hand. The sooner you avoid them or stop doing them completely, the better for your future self.
Let’s get into them.
Timing the Market
There are trained professionals who do this for years now and none of them is capable of timing the market with pinpoint precision, so chances are you won’t be either.
If you try to time the market you might buy at a peak point and panic sell at the first drop you weren’t expecting.
So the best strategy here is to dollar-cost average in an ETF, like the ever-so-reliable S&P 500.
Getting emotional
The moment you see the graph turns red you fear losing what you invested so you panic sell, ending up losing money anyway.
Ego tends to be a problem either when you hold on to a stock much longer than you should.
Just focus on the fundamentals and leave your emotions aside.
Copying others
If you just copy-paste the investments of a friend, YouTuber, Wallstreetbets, or finance legend, you aren’t learning anything about investing.
Even if you have 100% confidence in the person you’re copying, chances are you might not even know the business you’re putting your money into. Plus your goals, resources, and risk tolerance might differ.
Give yourself time to learn about what you want to invest in.
Not investing
I know, shocking! It’s easy to say “I’m young, I still have time.” And you might be right, however, if you do so, you’re prejudicing your future self in thousands of dollars.
The money you invest in your 20s is worth 4 times more than what you might invest in your 40s. It’s simple math:
- $10, at 7% return, in your 20s, will be worth $140.97 in your 60s.
- $10, at 7% return, in your 40s, will be worth $30.87 in your 60s.
It is all about the Compound Interest effect, where the more money you have the more money you make.
Inspired by a fellow creator, I decided to challenge myself to publish 100 short-form articles within January. This is article number 15.
