Financial Mistakes. How To Avoid Them?

Mistake: The chase for yield
Risk-free yield is higher than the percentage of the deposit does not exist. Therefore, the income is above 5.9% in foreign currency guarantees linked to risk of losing some or all of your savings. Therefore, seeing the announcement of a guaranteed return above the interest on deposit, it is best to avoid this company, as with very high probability it will be a pyramid scheme.

Mistake: Investing without a time limit
Unable to invest wisely, if you do not know for what specific purpose it is done. At the same time to “earn” – not the goal. The aim should be time, cost and priority. Only by clearly defining it can intelligently choose the appropriate tools for you to invest.
So, if you invest in order to save up for some important goal in 1-3 years, it is better to prefer bank deposits and highly bonds or bond funds.
If your goal should be achieved in 3-10 years, in addition to deposits and bonds, you can add to your portfolio up to 50% of the shares or equity funds.
Well, if you invest for 10 years or more, you can increase the stake to 70-80%.

Mistake: Underestimating of your response to the risk
If your colleague or neighbor is investing in stocks and is happy at returns of 20% annual or more, it does not mean that you urgently need to buy them. The fact is that every person has his own level of risk tolerance. And if your neighbor is willing to tolerate sometimes fall in the value of his shares to 50%, you may find yourself not ready for this, you will sell the shares just at the wrong time, get a loss and you will be disappointed in the investment.
It is therefore very important to correctly determine your appetite for risk: if you are not ready for a significant fall in the value of your investment, place most of the money in deposits and strong bonds. If you are ready to sharp fluctuations in the size of your savings you can put a significant part of them in the safety stock.

Mistake: Ignoring of insurance
Many people think it’s useless to insure apartments, cars and even more life because they believe that it will just not happen. Life is insured by less than 2% of the population, although one of the most common causes of delinquency and defaults on loans are just incidental expenses for medical treatment. Such costs as the repair of the apartment, and so on in most cases are unexpected and require substantial expenditure to which not everybody is ready. Therefore, property and life insurance is a pledge of confidence in the future of every person.

World crisis has made many people look for ways to save money and saving money expert. Another part who already earned some cash and would like to make more, certainly might be interested in mutual funds investment advice. Moreover, financial planning might be of great interest to young people as they need to arrange many things in their lives, and here financial advice for young people site can help them.

Fortunately we live in the world of high technologies. It wouldn’t be wise not to use this really unique chance. Current online technologies help us break the borders and search anything we need all over the planet. Go to social networks, check respective topics, join online discussions in niche forums. All this will help you be well informed about the events concerning your hobby. Also, subscribe to the RSS feed on this blog not to miss the latest publications on the topic.

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