For the budding entrepreneur or investor looking for the smartest ways to develop their available capital into something greater, take a look at this list of five investment potholes to avoid throughout your financial journey.
Not diversifying
Finding a golden well of opportunity in investment might seem like something you should jump on as soon as possible, but be careful not to put all of your chips on the table straight away. Should an area take a dip or turn out to be a failure, it can quickly snowball and have disastrous results. Make sure you try to vary your investment portfolio as much as possible to be in with the best chances of success.
Not seeking out expert advice
Jumping in feet first to an investment is a bad idea if you don’t know what you’re doing. In that respect, it’s very similar to other things in life. If looking to start off small, there are many different smartphone apps out there that can serve as a nice introduction to the stock market, segmenting the different market into easily digestible areas that are rated in terms of risk/reward.
Those with an ample portion of capital to allocate may decide that they want to look further into the property market. If this is the case, RW Invest are one of the many property investment companies that are there to help you every step of the way. Not only can they help you with any questions or queries you might have with regard to specific investment areas across the UK, but they can also help to give you that reassurance that you’re making the right decision.
Not having the right amount of capital
Investments, no matter how attractive they might seem, might not always be feasible if you don’t have the relevant funds required. With your primary source of income and family/emergency expenditures in mind, consider how much you can realistically part with, to accumulate over a long period.
Not educating yourself on the market
Not knowing what the most lucrative, popular and successful aspects of your potential investment field will mean you have no bearings on what is most profitable. Again, as stated above, make sure you know what you’re doing (or talk to someone who knows what they’re doing) before getting started.
For those thinking about property investment specifically, there are two aspects to the market that are extremely important:
- What are the most lucrative areas? In the UK, some areas are much more profitable than others, both in terms of rental yield and capital growth potential. The North West is one of the best areas at the moment. Rental yields the city of Liverpool sit at an average of above 5%, with London trailing behind at around 3.7%.
- Who is my ideal target tenant? Having a brand-spanking new apartment is all well and good, but if you don’t have consistent and regular interest from prospective tenants looking to move to the area and live in your property, it’s pretty pointless. Think about who you want to market your purchase towards, and partially base design/location decisions around that.
Not paying close attention to your investment ventures
In fairness, some aspects of investment can be as hands-on or hands-off as you’d like, but keeping a scrutinous eye on your investment projects will help you to be confident that you’re doing all you possible can to maximise returns.
Another valuable piece of advice is to make sure that you’re not getting too attached to the thing you’re investing in. Love apples? That doesn’t necessarily mean that you should invest in Apple. Again, those getting started might want to seek out expert advice on a particular avenue if dead set on it.
