7 Stock Market Investing Mistakes


investing in the stock market is really
not as complicated as it looks but I feel like a lot of the beginners out
there are making the exact same mistakes and these are mistakes that I’ve made
too when I was a beginner so I just want to clarify all of these mistakes so that
we can do a better job as beginners so in this video I’m going over the 7
biggest investing mistakes that beginners make in the stock market so
that you guys can avoid them and start off doing something a lot better now if
you just found this channel I’m Jason with honest finance and I make a lot of
videos on different topics that will give your life and your finances more
value so definitely subscribe if you’re into that type of content but for now
let’s just start talking about the beginner mistakes in the stock market
and before I get into everything I just want you guys to know that I am NOT a
professional trader by any means so just take this advice for entertainment
purposes only however it is my opinion and I do think it’ll help you if you’re
a beginner in the stock market okay so the first mistake that I see a lot of
beginner investors making is just the fact that they have got a lot of high
interest debt in their personal lives and then they’re investing on the side
and that is not something you want to do you do not want to have high interest
debt while you’re actually investing in the stock market I really have no
problem whatsoever if you want to invest like 200 bucks into the stock market
even if you have high interest at at home but the point is is that I don’t
want you investing more than that because if you’ve got a credit card that
has 18% interest you need to pay that sucker off before you start investing
any more money in the stock market and the reason this is a big mistake is
because if you look at the history of the S&P 500
it’s only averaged about 10 percent through all the years and then if your
credit card is 18 percent then that means that you’re just going to be
losing 8% more than what you can actually accomplish on the stock market
as an average so definitely don’t do that get your credit card paid off first
and then start investing your money in the stock market and also I know that
this contradicts itself but if you work for a company that offers a 401k match
then I would definitely take full advantage of it
because that is a 100 percent return on your money even if you have high
interest debt at home your retirement is so important for your future so please
make sure that you take care of your debts responsibly and if you do have a
401k match take full advantage of it because it is definitely worth doing so
so just remember to take care of all of your high interest debt first before you
start investing a lot of your money into the stock market that way the numbers
add up and you’re actually going to end up making money now the next big mistake
that I see a lot of beginner investors making is just the fact that they base
their moves on speculation news and then different forums and things that they
read on the internet and they base everything off a motion rather than
long-term strategy which is something that they’re just not doing you
definitely don’t want to be making a bunch of different moves emotionally
because of what someone else told you because if you have a strategy in place
you just need to stick with that stick with your gut and you’re gonna be a lot
better off and then a quick tip that I want to add is that you should always be
keeping long-term goals because you’re never gonna get that emotional if you’re
looking 5 to 10 years out versus what you’re seeing today tomorrow or next
week because those are all gonna be going up and down all the time
and if it’s 5 to 10 years out it’s just not that big of a deal when things
fluctuate quite a bit there’s also huge tax benefits for keeping your shares for
longer than a year because you’re gonna be taxed on what’s called long-term
capital gains so just keep that in mind I’m not gonna elaborate very much but if
you keep your shares longer than a year there are tax benefits for doing so
now the next mistake that I see a lot of us making is that a lot of the big
brokerages out there actually charge trading fees so if you’re gonna buy
shares or sell shares you have to pay a trading fee which is just a total waste
of money nowadays because there are a lot of brokerages that do not charge
trading fees I mean the free brokerages probably won’t have 24/7 call centers if
you ever run into an issue so as long as you’re ok with email and waiting a
couple days to get something solved then definitely go ahead and just stick with
the free brokerages because those free trades are definitely worth it all of
the free brokerages have their pros and cons but right now I definitely prefer
using weeble because they have the best signup bonus because if you sign up with
them you can get one free share just for signing up and that’s gonna be worth up
to 250 bucks and then if you deposit just a hundred bucks then you can get
another share that’s worth up to a thousand dollars so if you do that you
can actually get two free shares with them and that’s the best signup bonus
that I’ve seen for all of the 3 brokerage accounts now if you are
interested in signing up for Weibo I’ve got an affiliate link in the description
below which means I may be compensated if you
click through it but just keep in mind that this is definitely the best signup
bonus that I’ve found for all of the different three brokerages and I have
been using them for quite a while now and I really do like them and they have
a lot of robust features that the other apps don’t have and then also if you’re
the type of investor that wants to use a financial advisor that is totally fine
with me but just pay attention to the expense ratio because a lot of financial
advisors out there charge between about one and two percent which is a lot of
money if you have a lot of money in the stock market so just pay attention to
the expense ratio keep that as low as you possibly can and you’re gonna be a
lot better off with your financial advisor so just remember that there’s a
lot of brokerages out there that don’t charge any trading fees and then if you
are gonna use a financial advisor just make sure that the expense ratio is
super low now the next mistake that I see a lot of beginners making is that
they are not diversified which means that they just go big on just a few
different companies and then if anything goes wrong it seems like everything goes
wrong because they only have a few in their portfolio honestly it’s not that
bad of a strategy to just have a few companies that you’re invested with but
the problem is is when you’re a beginner you’re gonna be too emotional and so if
those stocks go up and down too much you’re just gonna make some moves that
you really don’t want to be making I’d recommend investing in ETF indexes like
the S&P 500 because that way you’re gonna have 500 different companies that
you can be looking after and if something goes wrong it’s probably not
gonna affect you that much and then once you have some ETFs then you can go ahead
and buy into some individual companies if you want to but at that point then
you’re gonna be diversified and if you guys have made it this far into the
video can you please comment down below and just say I got it that way I
actually know if I’m making sense about what I’m talking about
thank you very much now the next mistake I want to talk about is very simple and
that’s just the fact that you shouldn’t be investing in companies that you don’t
understand this is really important because I feel like the more you know
about a company the less likely you are to get super emotional if their shares
go up or down in the market and then that way you can actually stick to your
long term goals and it’s gonna be better for you in the long run and even if you
don’t understand a company very well it’s still a good idea to at least know
who they are because then you at least have a start of something that you
understand just a little bit I mean think of it like this without looking at
any data you could say that you know who Disney is and you could probably assume
that they’re a healthy company that’s only growing and so therefore just
because you know who they are that’s a much better start for something because
you at least know what they are what they’re about and probably where they’re
headed so just the fact that you already know who Disney is is a really good
start because you don’t want to just invest in some random gold mining
company out of Kansas just because it seems like a good investment
now the next mistake that I see a lot of beginners make is that they buy shares
of companies just because they feel cheap because they don’t cost very much
money but that doesn’t mean anything as far as whether it’s a good value or it’s
not a good value so for instance if you were looking into a company and their
shares were only $8 a piece that might sound like a good value because it’s
something that you can afford but the problem is is that there’s a lot of
different factors that go into the share price and it might actually be a
complete ripoff and you just don’t know it at that point because think of it
like this if you were gonna go buy a 20 ounce soda you generally know that those
cost about two to three dollars so if you went to Walmart and one of their
sodas was actually eight dollars you would instantly know that that was a
ripoff because you already knew that they’re supposed to be about two to
three dollars whenever you buy them so therefore in the stock market if you’re
buying an $8 share you need to understand what its true value is
supposed to be so that you can tell if it’s a ripoff or if it’s a good value
because the problem here is that all of us can afford an $8 soda but that
doesn’t mean that it’s actually a good value so just keep that in mind whenever
you’re shopping on the stock market so that you don’t buy something that’s
overvalued you actually want to buy it when it’s cheap and low and honestly the
easiest way that you can do this on different shares is just to check the
price history over like the last five to ten years and then that way you can see
if it’s high or if it’s low and that can give you a very basic idea of whether
you’re paying too much for the share or not and keep in mind that there’s a lot
of other factors that play into whether or not a share is a good value or not so
just keep in mind that there is a lot to do when it comes to researching a
company working on a very shallow point of view you can either check the p/e
ratio or their history like I just talked about so just keep in mind that
you want to buy low and sell high and that’s always something you can
definitely keep in mind and then the last mistake that I want to talk about
is the fact that a lot of investors will actually borrow money to invest in the
stock market with money the they don’t have so if you’re borrowing
money from your family or your friends to invest in the stock market that’s not
a good idea but I’m specifically talking about margin trading which is something
that you can do with brokerages where you can borrow money from them and then
you can pay them back at an interest rate to invest back into the stock
market there’s a lot of investors out there that use margin to their advantage
but the problem is is that if you’re a beginner you’re probably gonna be making
too many mistakes in the beginning and that is not something that you want to
be taking any risk for especially when you don’t have the money to lose and
then when it comes to your own budget I definitely want you only investing money
that you can afford to lose so when it comes to your family and things like
that make sure that you take care of your responsibilities first and then
invest after all of those are taken care of so just please understand that there
is risk when it comes to investing but I can promise you if you do it responsibly
and you stay away from a lot of these different types of mistakes you’re gonna
be better off in the long run and that’s the whole point of investing is that it
is long-term and that’s what you’re looking for you’re looking into the
future well hopefully you guys learn something from this video because once
again I’m Jason with honest finance and I make a lot of videos on different
topics that will give your life and your finances more value so definitely
subscribe if you guys are into that type of content but for now I’ll just leave
some more investing videos that you guys can watch or you can just move on with
your lives do whatever you want but thanks for watching

16 Replies to “7 Stock Market Investing Mistakes

  1. Enjoy the video!! Here's the Webull affiliate link for 2 free stocks if you have any interest. http://bit.ly/Webull_HF

  2. I got it! :). Great video Jason. I'm so glad you made your first point about paying off high-interest debt first. 100% agree.

  3. I got that you shouldn't have debt. That is easy, but buying and selling shares without a broker is an unknown territory for me.

  4. I got it. But you also mentioned to always buy low and sell high, are you suggesting to time the market? I heard that investors shouldn't. Cause there are a few stocks i'd like to buy but since all of them are at their all time highs; I'm just waiting on the side till their prices are dropped.

  5. Yep definitely made my fair share of these mistakes.. especially investing solely off of speculation when I first started.

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