You know what it is. That's right. It's time to talk money with your money nerd and financial coach. Now tighten those purse strings and open those ears. It's the Money Talk with Tiff podcast. Hey. Hey. And welcome to Tiffany's Take, where I answer your money questions right here on the podcast. So if you want your question answered, then go to moneytalkwitht.comXTiffany and I'll be more than happy to answer for you. So y'all must really love this investment topic. So we're going to keep this
investing theme going. Someone asked, okay, Tiffany, what are some investment mistakes that people make and how do I avoid them? So I came up with a list of some investment mistakes and some things that you can do to avoid those mistakes. So let's hop right in. First and foremost, which I've hit on the last couple episodes, but lack of diversification. I feel like this is the most common investment mistake that people make. And what that is is putting all your money into one
investment or asset class. And then this can lead to significant losses if that investment doesn't perform well. So that's like putting all your money in crypto or putting all your money in real estate or putting all your money in stocks, whatever the case may be. But if that tanks, then what? You have nothing to fall back on. So the solution to that is just to diversify your portfolio by spreading your investments
across all the different asset classes. So this strategy can help mitigate the risk and stabilize your returns. One thing that I like to tell people, when it comes to diversification, also think about diversifying outside of the country. So don't just look at domestic opportunities. Also look at international opportunities as well. Because what if I told you during the 2008, 2009 financial crisis, people that were invested
in global. So in international stocks, they didn't get as much of a hit as people that were only invested in domestic stocks, which is, you know, just U.S. stocks. So that just shows you the power of diversification. Some people actually made money during that time in international things versus, you know, the US Was going through so much domestically, and people were making money international. So that's why you always want to have diversification in all ways that you can. Now you
can overly diversify. That is also a thing. But most people don't get there. So don't even worry about that. Just make sure that you diversify as much as possible. The next mistake I see people make is emotional investing, which I kind of hit on in previous episodes, but that's making investment decisions based on emotions such as fear or greed. Usually this results in buying high and selling low. So this goes into trying to follow the trends,
you know, trying to be greedy. Oh, GameStop is going up. Let me get in. Guess what? By the time you see GameStop going, because it's not based on any fundamentals, not based on their financials, it's just based on what you see is trending. So mind you, is trending for a reason, because it's already on the increase. So now if you hop in, what you're doing is you're buying high. And then once you sell, you're going to have to sell low.
Because if you're following the trends, once it starts dropping, it's already dropping. So the solution to this is to develop a clear investment plan and stick to it regardless of what the market does. So keeping that long term perspective can help you stay calm and make rational decisions. Most investors are emotional investors and unfortunately that's
what gets in the way of returns. So if you can get those emotions under control, like I said, one of my strategies is I don't even look at it most of the time, then that can help you as well. Which ties into number three, which is trying to time the market. So timing the market is attempting to predict and capitalize on the market highs and lows, and it's incredibly challenging to do and it often results in missed opportunities.
I would say you cannot time the market. I don't care what market you in, you can't time it. When I bought my house in 2017, I had no idea it'll be worth as much as it is today. So my thing is you just get in and then you just ride the waves. That's just how it goes. So focus on a consistent investment strategy, such as dollar cost averaging, which involves investing a
fixed amount regularly. This approach reduces the impact of market volatility because if you are putting in a certain amount every single month, every single week, whatever you decide to do, then you're starting to average those costs together. And so that way you're not losing as much, if that makes sense. I'll say the next investing mistake people make is neglecting research.
So investing without understanding the fundamentals of assets or the market can lead to uninformed decisions and losses. So this goes back to what I said last episode. I think it was with Warren Buffett. He said, if you don't fully understand something, then don't invest in it. And that is his strategy and he is one of the best investors of all time. So make sure that you really understand how
things work. So that way you can make informed decisions. So take time to research and understand those investments, read the financial news, follow market trends, consider taking educational courses, listening to podcasts, all that stuff to boost your knowledge. It'll pay you so much in the long term. Another mistake is in ignoring fees and costs. So overlooking the impact of management fees, trading costs and other charges can erode your investment returns over time.
And especially if you hire a financial advisor, really understand how they're getting paid, what that looks like, and that you're they're acting in your best interest. I'll make sure I link to a podcast episode I did about what to ask financial planners and financial advisors. So that way if you decide to go that route and not do it yourself, you have some questions that you can ask. But anywho, the solution to this is to be aware of all fees associated with your investments and seek low
cost options where available. Comparing fees across different platforms, investment products people can save you money in the long term. The next mistake people make is not having a plan at all. So investing without a clear plan or set goals can lead to impulsive decisions and unclear expectations. This falls in line with just investing because you see everybody else investing. No,
invest because it's something that's going to help you. So define what your financial goals are first and then create a strategy to achieve them. And then regularly review and adjust your plan to make sure that you stay aligned with your objectives and your risk tolerance. Because every so often your portfolio needs a rebalance, which means that you're moving money around to make it so that it's still on track to what you're trying to accomplish.
And you won't know when it needs a rebalance if you don't know what you're doing it for. So make sure that you have a plan and then the last investment mistake. I'm sure I can name a ton, but I'm trying to keep this episode short. Sweet to the Point is ignoring your risk tolerance. So that's failing to consider how much risk you're comfortable with and that can lead to anxiety and poor investment choices. So make sure you assess your risk tolerance before you invest and choose assets
that match your comfort level. There's so many options out there that regardless of if you would lose sleep if you lost $10 or if you would lose sleep if you lost $1,000, like there's something out there for everyone. So just make sure that you adjust your portfolio as needed to make sure it aligns with your risk profile. So if you avoid these common mistakes and adopt a discipline informed approach, you can enhance your investment success and work towards achieving your
financial goals. So remember though, investing is a journey and it's continuous learning and as you continue to learn, it'll help you navigate it more effectively. So make sure that you're keeping all of this in mind as you start on your investment journey, or as you're already on your investment journey and maybe at the brought up some things you didn't think about. Start keeping these things in
mind. And if there are any questions that you want me to answer on the podcast, please go to ww moneytalkwitht.com Xtiffany and I'll be more than happy to answer for you. But until next time, I hope you have a wonderful rest of your week. Don't forget to like, subscribe, review, share all of those good things. Rate. It really helps us find more people like you. All right, until next time. Bye. Thank you for listening, joining and being a part of the Money Talk with Tiff
podcast this week. You can check Tiff out every Thursday for a new Money Talk podcast, but if you just can't wait until next week, you can listen to previous podcast [email protected] or follow TIFF on all social media platforms at Money Talk with T. Until next time. Spend wise by spending less than you make. A word to the money wise is always sufficient.