Just like when you were in school, failing to do your homework probably led to undesirable results. Failing to do sufficient research is also a mistake. In investing, you need to conduct sufficient due diligence, which is the amount of investigation that a reasonable person would take before undertaking an investment. Unfortunately, retail investors often do insufficient due diligence into the companies in which they invest. Instead, they rely on so-called gurus they see on TV or the internet who often have their own incentives and biases for their recommendations. Research helps you understand a company or a specific financial instrument so that you know what you’re facing. You’re able to identify warning signs and risks. Without either conducting your own research or relying on the research of others is like flying blind. You’re likely to crash and get hurt. The greater your due diligence, the better your investing results are likely to be. Good investments are available but you must discover them. You need to exercise patience and discipline.

Investing pays off if you know what you’re doing. Investment gurus and market pundits are eager to offer their investment advice. Unfortunately, much of it is faulty. If you’re looking to make a big win by betting your money on your gut feelings, try the casino. If you make savvy investment decisions and invest for the long run, your portfolio will grow to reflect the soundness of your actions. Learning investment fundamentals and avoiding common investing pitfalls can help you earn a good return on your investments and reach your financial goals. Although the following keys are not a guarantee of investing success, you’re more likely to keep on the right path and build a solid financial future by paying attention to them when making investment decisions.

  • Learn the basics of investing and take a long-term view.
  • Establish financial goals, develop a tailored investment plan and a rational implementation strategy, and stick with it.
  • Don’t let emotions guide your investment decisions.
  • Endure short-term pain for long-term gain.
  • Balance risk with reward and avoid unnecessary risks.
  • Invest in what you understand and feel comfortable.
  • Diversify your portfolio by spreading your wealth among asset classes.
  • Start investing early, make a habit of investing, and take advantage of retirement accounts.
  • Keep costs, expenses, and fees low.
  • Review and rebalance your portfolio periodically.
  • When in doubt, seek advice from an investment professional who has your interest utmost in mind.