Article
It’s too easy to make
costly mistakes with business investments, especially when you are not armed
with the right information and knowledge to guide you. Jumia Travel, the
leading online travel agency, shares 5 costly mistakes people make with
business investments.
Investing
money they’ll need soon
Avoid these kinds of
investments that are just based on speculation and market timing. If you are
setting money aside for a goal, the money shouldn’t be considered or used for
sudden and unplanned investments, especially those that are likely to keep your
money on lockdown for a long period of time. You can easily end up regretting
it when important and time-sensitive expenses come up.
Not
doing their homework
Before investing in any
business, it is extremely important to do your homework and research to know
the ‘ins and outs of the underlying business’. It is important to understand
how the business grows, makes profits and basically, the rubrics of the
business. Before engaging in any business investment, you should always
remember Peter Lynch’s investment maxim, which states clearly that you should
‘Invest in what you know.’
Neglecting
legal counsel
Neglecting legal counsel
on business investments is a highly risky, and it can result in damaging
consequences. A lot of first-time investors believe that lawyers are just out
to get their money, and while that might be partly true, the legal counsel from
these lawyers are also very valuable and vital in protecting your interests and
resources in any business investment, especially if things unexpectedly go
wrong. For example, consider the case of a designer that unknowingly signed a
contract that gave her handbag company the trademark to her name. When
investors eventually came in, her company name belonged to them, and she was
pained by the fact that she could no longer use her own company name. She
wished she had gotten a lawyer to give her proper legal counsel. Therefore, it
is very necessary to get the right attorney who understands your business goals
and can protect your interests well.
Being
emotional with investments
Mixing emotions with
business or money can be very costly, you need to remain as focused, logical
and rational as possible. Don’t be an investor that invests without tangible
information or evidence, and don’t be an investor that invests based on a hope
or desire that things will pull through or get better. Think well and be
logical and rational about investments. The two most important emotions you
should guard against in making business investments is fear and false hope.
According to Aol Finance, basic signs of an emotional investor include: holding
on to a failing stock thinking it will come back at some point; selling a stock
at the first sign of a loss; and being glued to the financial news cycle.
Procrastinating
investments
Try to avoid not investing
early enough because all it really results in is losing good opportunities to
grow your money. Stop with the excuses that make you postpone investments, and
just do it.
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