Health & Wellness: Missteps young investors should avoidPublished Sept. 30, 2012

Metro Creative Services

The global economy remains in flux, and investors across the globe continue to witness a roller coaster ride with respect to their investments. Substantial gains one day are followed by a precipitous decline the next, and many investors are simply along for the ride and struggling to make sense of it all.

Though veteran investors are more familiar with such fluctuations, young investors might be more confused. Some might even delay getting started on their portfolios, which is one of the many mistakes young investors commonly make.

The following are some of the more common mistakes young investors tend to make, each of which should be avoided no matter how difficult the market becomes.


Delaying the inevitable

Young people, particularly those who are just beginning their professional careers, often procrastinate when it comes to investing. This could be thanks to a host of factors, including inexperience, fear or simply wanting extra money in their pockets while they're young. Each of these factors makes sense, but none of them should keep young people from investing. Most young people have seen the projections that show the staggering differences in money earned when a person begins investing at 25 as opposed to 35 (or even 30). Even something as simple as investing through a company's 401(k) is a good place to start, and young investors should take advantage of the opportunity to do so as soon as they're eligible.

When young investors put off investing, the results later on are not often pretty. That's because of the tendency to overcompensate down the road. An investor who begins young and starts learning how to invest will feel more comfortable with his or her portfolio, and won't feel the need to make up for lost years down the road.

An ill-informed investor

Young investors know about the need to invest, but many simply don't ask enough questions about their investments.

A young investor is in a great position for a number of reasons. Young investors are typically decades away from retirement and, as a result, can take on the most riskYoung investors commonly understand this principle, but that does not mean they should simply sit back and accept it when a risky investment does not pan out. While it's good for young investors to take risks, if the risk doesn't pay off, learn the reasons behind its failures. Doing so will lay a solid foundation for future investments.

Learn what makes some risks better than others, and don't necessarily get married to a certain investment strategy. The markets are constantly evolving, and investors need to evolve along with them to be successful over the long haul.

Only investing

"extra" money

Another common mistake young people make is the way they perceive investing. Many young people approach investing as something they will do when they get some "extra" money. Unfortunately, the day young people get this extra money rarely, if ever, arrives. Additional expenses, including vacations with friends or nights out on the town tend to take precedence, and young people find themselves approaching or even in their 30s without an investment portfolio to speak of. Treat investments as a monthly expense like rent or a car payment. Then, if there is any extra money at the end of the month, add that to the amount already invested.