08 Aug 2022 | Edukatips

10 Investing Mistakes Made by Investors

People across generations are no stranger to investments and many have made investments.  However, as we prepare for the future, there are still many investors who make mistakes because investing requires discipline, patience, and acumen in the direction of the market.

Here are 10 common mistakes made by investors :

1. Sitting On Investment Goals

Many investors are not discipline because they don’t have clear investment goals, making their investments unplanned and are made only when they remember.

There’s nothing wrong if we don’t have clear investment goals (such as preparing for marriage fund/buying a house/children’s education abroad, etc.), we can simply amass wealth for future needs and retirement. The more you set aside, the sooner you achieve financial freedom.

2. Not Preparing an Emergency Fund

Investors should divide their financial plans, not only for the future, but also for an emergency fund. An emergency fund is cash reserves prepared for unforeseen emergencies. Usually, these funds are used in case of accidents or natural disasters, house or car damage, etc. This will help to cover such unexpected events that won’t hurt your finances.

3. Deferring Obligations

Making purchases using credit facilities is advantageous and done by many, whether using a credit card or online loans, which have been booming lately, especially with the benefits or special promos advertised.  However, many still defer their obligations to pay, leaving them with higher interest and deeper debts. You should pay off your debt immediately to enjoy healthy finances, and no reason to pay more for what you owe.

4. Spend First

Most people usually use their salary to accommodate their wishes and use the remaining for investment. Ideally, pay off your obligations first and set aside some funds for investment or known as pay yourself first, and use the rest to cater to your desires. It is done to ensure disciplined investing that is according to plan, and to prevent you to invest with what is left of your income.

5. Not Having a Budget

Some people do not have a planned budget, not realizing that they overspend and leaving a small amount of money to invest. This can consequently interfere with the investment goals.

Draw up a budget for your needs immediately such as for investments, daily needs, pay off debts, and wants/entertainment, and commit to them to ensure you don’t spend your income for unnecessary expenses.

6. Not Having an insurance

Insurance is often seen as an unnecessary additional expense, but in reality, insurance is essential during our lives. If you fall ill and have insurance, it won’t interfere with your budget, emergency funds, or investments.

7. Not Maximizing the Company Benefits

The benefits obtained by employees vary depending on the company, which can be in the form of health benefits, marriage, basic necessities, etc. Sometimes, employees do not realize it or forget to use the benefits provided by the company and end up paying things with their own money, where it can be optimized to boost investments.

8. Trapped in FOMO

Fear of Missing Out or better known as FOMO is a sense of worry that arises if you are missing out on something that others are experiencing. Usually, if you care more about FOMO, you’ll have bigger expenses than usual, where in fact they should be used for investment. Preferably, add this into your budget so that it won’t interfere with your investment.

9. Millennial Lifestyle

It is an affluent lifestyle considering that you have worked hard and want to enjoy your money with a more luxurious lifestyle – that is temporary lifestyle. Similar to FOMO, it is better to add these expenses into your budget to avoid your investment being disrupted.

10. Medsospedia

Lately, many people who don’t understand investment and yet invest in products with high yields without realizing that they are exposed to high risks, and share it with their friends on social media. Once their friends interested in joining, the investment market undergoes a change, causing the investment to significantly subdue.

We recommend that prior to making an investment, whether encouraged by a friend, influencers, or families, learn about the product first, the risks, how it works, managers, etc. Don’t forget to check whether the product is registered with the OJK. 

Investments are essential for the future, but it is also important to ensure that the investments you make will be maximized to achieve your investment goals. Avoid these common mistakes made by investors and invest in BCA now and get Rp25,000 cash back for your first investment.