We all make mistakes. But making mistakes with your money can haunt you for a lifetime. Here are three of the most dangerous mistakes investors make – and how to avoid them.
Mistake #1: Holding on too long to winners
Selling a hot investment is difficult, but the price can’t go up forever. On a regular basis, sell some winners and reinvest the profits in other promising investments to diversify and keep your portfolio balanced.
Mistake #2: Waiting too long to sell losers
It’s painful to realize a loss, so you wait (and wait) for a losing investment to bounce back. Bad idea. Set a limit on how far a price can fall before you will sell and stick to it.
Mistake #3: Trying to time the market
The stock market has gone up two out of every three years, on average, over the past century. Trying to outguess the bulls and the bears is futile. Instead, invest at regular intervals whether the market is up or down.