Wrong Reasons To Invest In Stocks

Your objective for investing guides how you invest, what you invest in, and ultimately the outcome of the investment.

There is no gainsaying the fact that there are many advantages of investing. From being able to build passive income, to the retirement benefits, to attaining financial freedom and so on, investing in stocks specifically is indeed an activity that every individual should be a part of.

However, just as there are many ways to invest and many benefits, there are also reasons NOT to invest. Your objective for investing guides how you invest, what you invest in, and ultimately the outcome of the investment.

If you invest for the wrong reasons, chances are that you will end up with the wrong results. Here are some of the wrong reasons people invest and the negative impact they come with:

Because Everybody Is Doing It

We often hear or read about how many people started their investment journeys and the level of success they have made from it. It is only natural that sometimes, this information spurs us to being a part of the winning team.

However, there is a big difference between being inspired to invest and simply investing because other people are doing it. This difference lies in the motive.

The first makes an individual want to find out more about what investment is about and the other simply makes the person invest blindly. Mob mentality will really not help you when it comes to investing.

Because It Sounds Cool

There is a certain ring that comes with being about to say you invest but this is never a good enough reason to invest. Investing for the face value of it or because you think it is something people of a certain class do, takes away the necessity of it and might ultimately affect how you go about it.

Because You Want To Double Your Money Fast

Investment is not a get rich fast project. It is rather a long and consistent process towards building something sustainable. You cannot build a house in one day.

As such, if you expect to invest now and have your money doubled within months, you are investing for the wrong reasons and this is a sure way to lose everything even before you start.

It is important to understand the risk and time requirement that comes with investing before commencing. Investing in stocks for quick gains will only cause you more harm than good.

Because It Worked For Another Person

Finally, there are people who invest in certain stocks because it has worked for their friends or family members in time past. This too is not a strong enough reason to invest and it is bound to fail.

An example of this is investing in Agricultural stocks simply because your friend is doing it is a recipe for failure. Rather, you have to invest from a place of information, competence, and alignment with your investment objectives.

In defining our investment strategies, it is important that we outline our reasons for investing as well as our expectations. It is only with the right foundation that we will be able to attain our goals.

Written by Lawretta Egba.