The 3 Biggest Mistakes to Avoid as You Prepare to Begin Investing
Whether you are running a $1 million dollar retirement account or a $100,000 retirement account there are a few mistakes that you can easily learn to avoid. When it comes to retirement planning or even planning for a trading & investment account many don't have a strategy, or rather, are not even sure where to begin. This is where we can help.
When Landshark Education as created we saw a a void; The void of real financial education for the retail trader and too much of a reliance on financial advisors, mutual funds and third-party brokers. We don't give investment advice; rather, we help our students to develop the skill set and knowledge to begin managing their portfolios the proper way. You may think you're alone in this, you're not. Our investing community spans over 10+ countries with multiple chat rooms with other investors that you can interact with on a 24-7 basis, something not seen anywhere in the educational industry.
So whether you're just getting started to take a step at controlling your money or whether you've been too scared to do it on your own let's take a look at 3 mistakes that you can avoid right off the bat.
1. Trading the Wrong Products:
This is not 1975 anymore and this concept of 'buy and hold' has done more damage to most rather than helped. This is also true with Futures or Forex trading. They are simply just 'too fast' of markets for most trading for retirement income or for a retirement account, they are volatile products, and for some this is great, but know what your comfort level is. If you're trading a small account or a retirement account the concept here is to control risk. How can we do that? By trading options, a risk controlled product. We know our max loss and (for the most part) max gain before any trade is taken on. If everything goes wrong we know that with an option that is the max amount of money we can lose.
2. Using News to Make Investment Decisions:
This has been proven time and time again to be a losing strategy. News can be something from a journalist to even an analyst rating/upgrade. Typically we are taught that this is beneficial and 'good news' for our stock when in fact it is actually the opposite. We saw this (and continue to see it) with ITT a few months ago. The stock was given high praise by financial media and days later filed for bankruptcy. What we try to focus on at Landshark is price charts and price action which is, in our opinion, the most non-biased way to make informed buying and selling decisions. Typically this comes from learning to properly understand a price chart, which many retail investors have never had training on.
3. Not Having an Income Strategy:
There is no right way to produce additional cash flow, however, relying solely on 401(K) withdrawals or Social Security simply won't do the trick. Even as someone looking at the market not trading a 'cash flow account', there still needs to be a plan. Part of creating an income strategy comes from who you the investor are. What are your goals? What amount extra a month would you like to obtain? What do you want to risk? And most importantly, how much time do you have to devote to this? The key is to first manage the risk. Most people that come to a Landshark Workshop will say that an extra $3,000-$4,000 a month would certainly do the trick, so how do you get there? For most it goes back to Mistake 1 above; first select the right product to use as the tool for this cash flow. Second, make sure to have a non-biased strategy in place, one that can pre-determine your cost and potential gain ahead of the trade. Be it you trade options, shares or futures the underlying premise to do it all is understanding the charts, from there, you can begin to develop an income based strategy.
If any of these pitfalls sound familiar to you, you're not alone. The good news is that it's not as big of an endeavor as most of us make it out to be in our heads. Does it take some time? Sure, like anything else it takes some review but what we find with most is that after a while they actually begin to enjoy the analysis and management of their own money, it's just taking that first step.
Keep this in mind as you begin your journey on this. You don't have to go at it alone. The ability to use the Traders Toolbox feature with your education at Landshark in itself is a great resource. The fact that you can chat with other investors who may have a story similar to yours is a great opportunity, and even better, you can share strategies or what has and has not worked for you from investing. And keep in mind, you can retake any Landshark Education program for 12 months at no additional charge, your learning never stops and we're here to ensure your success along the way.
We hope you enjoyed these insights and encourage you to reach out by attending a Free Investing Workshop near you or by scheduling a call with us.