Investment Decisions to Avoid as a Beginner

Starting your investment journey can feel overwhelming, especially if you are new to the world of finance. This article will help you avoid common mistakes that many beginners make. By understanding these pitfalls, you will be in a better position to make smart investment decisions, manage your money wisely, and build a strong foundation for your financial future.

Why You Should Invest

Investing is a crucial strategy for financial growth. It allows your savings to work for you, helping you reach financial goals like buying a home, funding education, or enjoying a comfortable retirement.

A big part of successful investing is setting clear goals. These goals help shape your investment plan by guiding how long you invest and how much risk you can take.

It is important to have both short-term and long-term goals:

• Short-term goals (like saving for a holiday or emergency fund) usually need safer, more accessible investments.
• Long-term goals (like retirement or buying property) give you more time to ride out market ups and downs, so you can consider options with higher growth potential.

Having a mix of both keeps you prepared for life’s needs—now and in the future.

You can start small—just what your budget allows—and increase your contributions over time. Step by step, this helps build a strong financial portfolio.

6 Investment Decisions to Avoid as a Beginner

Stepping into the investment world for the first time is exciting, but it is easy to make mistakes. Here are six common decisions that beginners should avoid:

1. Following Trends

Many beginners make the error of investing in the latest market trends without proper research. It is important to understand what you are investing in, including its background and past performance.

2. Ignoring Risk Management

Risk tolerance varies from one investor to another. It is vital to assess how much risk you are willing to take on and to choose investments that align with your comfort level. Ignoring this can lead to stress or financial losses.

3. Chasing High Returns Quickly

High-return investments typically come with higher risks. Be careful with investments that promise fast, high profits—they are often unstable and could result in losses in the short term.

4. Avoiding Diversification

Diversification is a fundamental investing principle that involves spreading investments across various asset types and sectors to mitigate risk. Beginners often make the mistake of investing heavily in a single area, which can lead to substantial losses if that sector underperforms.

5. Emotional Investing

Making decisions based on emotions—like panic or excitement—can hurt your long-term goals. Stick to a plan and make decisions based on facts, not feelings.

6. Forgetting Fees

All investments come with associated costs, such as management, transaction or performance fees. These can add up over time and reduce your profits. Always factor in fees when planning your investments.

Common Bad Habits of Beginner Investors

While it is important to be aware of specific investment decisions to avoid as a beginner, there are some common behavioural mistakes that can also affect your results.

• Failure to review investments regularly: checking your portfolio regularly helps you stay on track and make changes to your strategy when needed.
• Overtrading: buying and selling too often can lead to extra fees and rushed decisions.
• No clear investment plan: investing without a goal or strategy can lead to less effective choices.
• Ignoring the impact of taxes: understanding the tax implications of different investment vehicles can help in maximising post-tax returns.
• Delaying investment decisions: procrastinating can be a significant barrier to building wealth. The earlier you start investing, the more you can benefit from the power of compound interest.
• No emergency fund: investing without setting aside emergency savings could force you to sell investments unexpectedly when you need cash.

Why You Should Invest with APS Bank

At APS Bank, we understand the importance of tailored financial planning. Our experienced investment advisors and relationship managers are committed to guiding you through your investment journey. We offer:

• Customised investment strategies: we tailor investment plans to match your personal financial goals and risk tolerance, ensuring strategies that meet your specific requirements.
• Diverse investment options: offering a wide range of investment products and tools, we cater to various investor needs, ensuring you have access to the best possible options.
• Complimentary financial planning services: benefit from our free financial planning services that equip you with the necessary knowledge to make informed investment decisions.
• 24/7 online access: through myAPS internet and mobile banking, you can check your investments anytime, view details like value, asset type, and performance, and download reports.

Getting Started with APS Bank

Avoiding common mistakes and getting the right advice can make your investment journey smoother. Start today by exploring our offerings online or filling in the form below to speak to one of our experts. Whether you are just starting or planning for the future, we at APS Bank are here to support you every step of the way.

Approved and issued by APS Bank plc, APS Centre, Tower Street, B’Kara BKR 4012. APS Bank plc is regulated by the Malta Financial Services Authority as a Credit Institution under the Banking Act 1994 and to carry out Investment Services activities under the Investment Services Act 1994. The Bank is a participant in the Depositor Compensation Scheme and the Investor Compensation Scheme as established under the laws of Malta. The Bank is also registered as a Tied Insurance intermediary under the Insurance Distribution Act 2018. This information shall not be deemed as investment, tax or any other form of professional advice. You should consult your independent legal, investment or other advisors to ensure that any decision you make is suitable for you with regards to your specific circumstances and financial situation. Terms and conditions apply and are available on request.