The Financial Mistakes Series (part #7)
The general rule is: the less control you have over the outcome of your investments, the more you are risking your money. In this instalment of my little ‘Financial Mistakes Series’ (the 7th – you can check out the full series here),I am covering…
Gambling your money
The extreme example is playing the lottery, where you have no control whatsoever over the outcome, but it should also include any type of investment where you don’t really understand what you are buying (eg. complicated financial products, business ideas that are not fully proven, etc.). Having said that, if you never play, you never win.
It is always a case of finding the best balance between preserving what you have (eg. never risk it) and giving yourself the chance of making some money.
The Family’s Perspective
As I mentioned previously, we invest pretty much all of our money in the stock market so, in a way, we are constantly ‘risking’ it. However we always do so after researching the companies we are investing in, in an attempt to decrease the amount of risk. We also keep our portfolio diversified, because we don’t have a Crystal ball and, as Warren Buffett once said, “Diversification is protection against ignorance“.
Are we going to make this mistake?
Erm. To demonstrate we also make money mistakes, I have to admit we do sometimes play the lottery! 😜 Just the minimum though (eg. £2 per week). Because sometimes it’s nice to dream 🙂
Needless to say, we have never won anything!
…More money mistakes?
Check out the full series here.
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