Co-founder of Affari Miei
February 2, 2024
“Depends”. This was most likely the most popular answer to your question “How should I invest?” and you will no doubt have felt a little frustrated. After all, it’s not really a wrong answer, also because when you invest you also have to be careful not to go into the red… yes, every investor’s nightmare! Today we will see together 5 methods to lose money for life which you should avoid if you don’t want to take big risks.
I want to tell you in detail what the things are you absolutely don’t have to do it because they risk doing you lose money Lifetime.
This is because the “Depends” that everyone tells you is objectively true, but many aspects need to be analyzed on an individual level.
Enjoy the reading!
5 ways to lose money
But now we have to get to the point and so I won’t waste any more time: I’ll list it for you 5 things you must ABSOLUTELY avoid if you want your assets to remain intact and above all if you want to avoid significant losses to your capital.
Let’s see in detail what they are five methods which could cost you very dearly.
First method
I could sum it up in one word: “word of mouth“.
That’s right, I mean trusting acquaintances who understand nothing about investments and financial markets, but talk anyway for the fun of it.
The recent Consob report dedicated to behaviors of Italian investors reveals a rather horrifying picture from this point of view, because most people tend to trust the advice they receive from people close to them (family members, work colleagues, friends).
However, it is not certain that these people are sufficiently educated on the topic of investments and the financial markets and therefore we should not trust them, not because they are in bad faith, but rather because it is not certain that they know what they are talking about or in any case that they are really trained to give us certain directions.
In fact, if these people talk about something they don’t know, they are giving us an absolutely useless opinion and which in certain cases can only make us lose money for life or we can’t earn it.
Second method
For this second method I can tell you the word “tangible“.
Another method to avoid is to trust only in tangible, physical things that can be touched, and not in virtual and which can disappear suddenly.
For example:
investments in diamonds real estate physical gold bars, sometimes even located in exotic places the trend of selling chinchillas for breeding and selling fur.
All these are investments which, when things go well, make us earn little and when things go badly, in some cases, they are disastrous scams proclaimed with final judiciary sentences.
People mistakenly believe that the real investments, the right ones to do, are the ones you can touch. While everything that would be virtual (stock exchange, financial markets) would be dangerous and to be avoided.
But in reality those investments are not virtual: just because maybe the actionsfor example, you hold them inside a securities account, in reality they are parts of companies that exist, sell products and make the economy go round.
And, above all, if you pay attention, you will see that most of the real investments they are the ones where the scams are concentrated… so, you are still certain that tangible=safe?
When you invest on regulated financial markets, you are investing in the most regulated and safest market in the world from a legal point of view: if you lose money it is because you approach the market incorrectly.
Don’t know how to invest?
Find out what kind of investor you are. Are enough 3 minutes to discover the best strategy for you.
>> START NOW!
Third method
For this third method I can tell you the word: “frenzy“.
I mean theenter and exit from the market continuously.
Unfortunately, the vast majority of people go into the financial markets without a specific plan. Indeed, always according to the recent Consob report, almost 70% of Italians invest with a time horizon of less than 3/5 years.
This happens for a very simple reason: the vast majority of people do not know the markets and therefore are afraid and look for investments short term or, if he enters the market, as soon as there is a fluctuation or moment of uncertainty, he withdraws his money and exits.
Sometimes he does it when he comes out losssometimes he does it thinking that he has made a profit and that he is smarter than others, when, unfortunately, he often invests without having a strategy.
If you don’t have a strategy and don’t know where to go and what to do, it’s useless: entering and exiting the market only makes you lose money.
Fourth method
The word to tell you about the fourth method is “brief“.
Invest only in short termalways looking for the exploit: the web is full of stories of people who, without understanding anything, have invested every day in something that is presented as “the novelty” and perhaps in a short time they have earned who knows how much money.
I’ll give you an example of cryptocurrencies: It really seemed like everyone was getting rich with cryptocurrencies.
The problem with this approach is that sometimes it works, but sometimes it works because there are also lottery winners in the world.
In the long termHowever, this approach it does not work: in most cases, these people are just the exceptions that went well, they don’t tell you about the times it went wrong.
Fifth method
For the last method instead I’ll tell you “do things randomly“.
In fact I mean the diversification random.
Now almost everyone has understood that you shouldn’t put all your eggs in one basket.
Many times people often say: “I bought fund X, then I bought ETF Y on my own because I no longer trusted the bank, then I also bought shares Z because I saw they were growing”. The problem is that perhaps they invest in the same market.
It’s as if you fill your walk-in closet with shirts: some with Italian collars, some with French collars, others with initials written on them, but basically you’re always buying shirts. But you’re not diversifying.
Because if one day shirts were no longer in fashion, those shirts would no longer be of any use to you. The same thing happens on investments.
If you buy 30 identical instruments and that market goes badly, something unpleasant happens.
What needs to be done is diversify in a thoughtful way, that is, look for investments that are decorrelated in some way, such that when one goes up, perhaps the other goes up a little less and when the other goes down, the other investment maintains its value or even increases it.
Conclusions
I hope these 5 methods to lose money remain in your mind and can help you make thoughtful and correct choices.
Remember that when investing it is always important to have one strategy and never invest randomly, because the consequences could be truly harmful.
Before saying goodbye I would like to leave you some as well resources which might be useful:
Enjoy the reading!
Find out what kind of investor you are
I have created a short questionnaire to help you understand what type of investor you are. At the end, I will guide you towards the best contents selected based on your starting situation:
>> Get Started Now