Personal Finance Tip of the Day

Handy Personal Finance
ISBN: 9781578593224

What must you consider before investing, and what are some of the biggest mistakes that individual investors make?

  • You must asses how long you wish to invest your money.
  • You must think about how much you can afford to lose.
  • You should avoid selling when the stock is low or in a panic.
  • You should be wary of recommendations from friends -- a stock's popularity probably means the price is high.

You must decide what type of investment to buy, how much money to put into the investment, how long you will hold it, how much of a return you wish to make, how much risk there is of losing money on the investment over time, how much could you potentially make, and how much you can afford to lose.

People investing in the markets sell when the price is low, like during or at the end of a significant decline, out of panic. And they buy at the highest price, once they have discovered a new investment that they heard of from their friends, who heard it from their friends, and so on. By the time the news reaches you, it's probably long past the time to have invested.

From The Handy Personal Finance Answer Book by Paul A. Tucci, (c) 2012 Visible Ink Press(R) Answers to more than 1,000 answers to questions on personal finance, its history, and managing one's financial life.
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