Once you get your hands on a surplus of capital, you basically have two options in front of you. You could A) spend it or B) invest it in order to earn some more. In time, money made through your investments can amount to a small fortune and you might even get to the point where you can quit your day-job entirely. However, in order to get there, first you need to learn a thing or two about investments. On your quest towards gaining the necessary knowledge, you are bound to encounter several pieces of useless or even plain bad advice. Here are four of those worst investment tips that have to be avoided at all costs.
1. Buy low and sell high
The greatest problem with this particular piece of advice is not that it is inaccurate, but that it is completely and utterly useless without any further clarification. Everyone who plans to invest dreams of purchasing something that costs next to nothing and then selling it once its price skyrockets. In other words, if the person offering this piece of advice doesn’t follow up with an explanation on how to recognize an investment whose value will rise in the nearest future, you can just dismiss their guide in its entirety. Still, in order to get a real advice, you would have to talk to someone with enough experience in forex trading.
2. The market is on its way down
‘The market is about to collapse and you could profit from this idea’ is the next useless piece of advice you encounter online. In the past, there have been a great number of market collapses, the most well-known being the one in 1929, and the most recent being in 2008. Because of this, it wouldn’t be unreasonable to expect the market to collapse once again in the future. After all, it’s just a matter of time, right?
Well, if you decide to look at things from this perspective, everything is just a matter of time. The next market collapse could come in 100 years or it could occur tomorrow morning. In other words, this is not something you should let guide your investment strategy.
3. Forex is for short-term traders
The main reason why forex trading as a short-term solution is so popular is because of the high leverage. Also, its popularity is because of almost daily gyrations of currencies. However, those who persist in this market long enough might actually start seeing some serious ROI. Although many people online may claim otherwise, the market is not rigged and it wasn’t meant for you to get rich overnight. Furthermore, due to the fact that forex trading is not a gamble, the more you know about the topic the greater your chances are.
4. Always have a plan
Similar to the ‘buy low, sell high’ tip, this piece of advice is an outright cliché. A person offering this piece of advice should teach you how to differentiate between a ‘good’ and a ‘bad’ investment plan. If not, then there isn’t much practical value to their words. The same goes for the idea of having a cash cushion. This kind of tip should always be followed by a guide on how to make an emergency fund and when to reach for it.
As you can see, even though these tips are not necessarily incorrect, they are usually either incomplete or useless. That’s because of their simplicity. In order to make some serious money investing, you need to leave them behind. You should focus on learning some actually applicable skills. You can start by learning how to set a stop-loss, or which day-trading strategies are the most suitable for beginners. Those instructions might actually make a difference.