Most Filipino millennials avoid investing like the plague. Why? Because of fear of scams (or lack of knowledge on investment options). However, your apprehension is not entirely your fault. Local media continues to focus on selling you fast moving goods, unlike countries like Singapore where there’s so much public attention towards investing.
Also, being money savvy isn’t exactly a quality that defines the millennial experience. Spontaneous and free-spirited—these characteristics make you a force to be reckoned with in many areas. In investing, however, these traits invite major slipups. And when it comes to your hard-earned salary, you just can’t trust the uncertain.
To help you succeed in investing, here are huge mistakes you should look out for:
1. Not Starting Early
In investing, the early bird is a step ahead of everyone. However, most millennials start late because of a lack of understanding and urgency. Procrastination can cost you a lot of money in the long run. The earlier you start, the more money you accumulate. Why? Because of compounding interest.
On top of that, you’re allowed to take more risks while you’re younger.
2. Wanting Instant Gratification
Millennials live in the now. You act on emotion and the fear of missing out. You fail to invest in your future because you choose to enjoy your money, even when it’s still small.
Waiting for your money to grow means you can have more of it in the future. We cannot stress this enough: Time and compounding interest go hand in hand, and investing is a long-term process.
3. Thinking You’ll Never Grow Old
Another problem with the “now” mindset is that tomorrow does come, and you need to prepare for it. The choices you make today will determine the kind of lifestyle you’ll have tomorrow.
Investing while you’re still young could mean early retirement! After all your years of hard work, you’ll be able to sit back and enjoy the good life.
4. Confusing Investing With Gambling
If you are blindly picking stocks, you are not investing. Speculation is not equal to making an investment. You need to make decisions that you’re confident with and are prepared to stick with.
Research and due diligence is key here. It helps you understand an instrument or product you’re getting into. Examine the nature, operations, and legality of the investment you are venturing in. Without a proper plan, an investment is as good as a gamble.
5. Following the Crowd
Wanting to follow the crowd is understandable; it adheres to the reassuring mindset of “safety in numbers”. And when people are talking about amazing returns, you’d naturally want to get in on the action yourself.
However, you shouldn’t rely purely on word of mouth from within your social circle. Align yourself with experts who will help you make objective decisions.
6. Having No Clear or Defined Goal
Without defined goals, the motivation to invest is not there. Why are you investing? There’s a huge problem if you have no answer. Investing is best done with your eyes wide open. Having clear reasons for investing is central to a successful investment.
Also, do not invest without a time frame in mind. If you are planning to accumulate money, you need to find investments suitable to when you expect to get your money’s worth.
7. Putting All Your Eggs in One Basket
Spread your money around! Diversifying your portfolio protects you from losing money. Having multiple investments helps you avoid losing all your assets in extreme market swoons. And unless you have the rare ability of seeing the future, you need to take risks into account.
8. Not Investing in Real Estate
Why aren’t millennials investing in real state? It’s because of fear of commitment and being tied down—which is a real shame. Imagine renting out a property in the right place, with the right appreciation rates. This creates a huge passive stream of income!
When choosing to invest in a property, it is important to know the reputation of the real estate developer. With so many developers out there, you have to guarantee that the one you choose has a proven track record in delivering quality.