Have you ever come across someone who tells you they make investments according to their ‘gut feelings’? They might even tell you about the time they felt certain a particular stock was going to do well, and what do you know, they were right. They’ll probably wax lyrical about that particular success… and yet you’ll never hear about all the times they acted on their gut feelings and went spectacularly wrong.
In reality, gut feelings are fine when you’re doing something that won’t have a dreadful outcome if it all goes wrong. Maybe you’ll follow your gut feeling when you spot a TV dinner that looks pretty good for example. You’ve only got to rustle up a sandwich if you get it wrong and the real thing tastes horrible. Get it wrong with your investments though and you could be counting the cost for a long time to come.
Never make hasty decisions
Hasty decisions can be dangerous. You’ve probably heard the saying ‘marry in haste, repent at leisure’. The same thing could apply to investing too. Not all investments are as easy to get out of as they are to get into. Furthermore you could end up losing money. Say you invest in a ‘hot stock’ for example because you think (or read, or heard) that it could get hotter still. If it doesn’t, if it actually takes a nosedive before you can get your money back out, you will lose money because you acted hastily.
This is why it always pays to take your time when it comes to making any kind of investment decisions. If someone is eager for you to take advantage of a particular investment – more eager than you are, for example – ask yourself why that would be the case. Why should they be more eager than you? What are they getting out of it?
Take the time to think about your own financial needs before doing anything else. Consider the investment you are looking into as well. Find out all you can about it. If someone has recommended it to you ask why this is the case. Are they benefiting in some way if you take it on? Everything you invest in should be chosen because it is right for you, your needs and your goals. These are really the only investments you should ever consider.
Many people find at some point in their lives that having a plan is the best way to move forward financially. A plan enables you to work out where you need to be in the future, and how you should stand financially when you get there. A plan is also in direct contrast to acting on a whim. While you can plan ahead and still not achieve your aims, the chances of not getting the results you want are far higher when you have no plan at all. This is why you should steer well clear of whims of all kinds, for now and for the future.