Avoid These 3 Investing Mistakes in 2022

Will 2022 be your most successful year as an investor to date? Could be. But if that is your goal then you need to stay away from these big mistakes.

1. Do not prepare for a stock market crash

We don’t know what the stock market has in store for the current year. Last year, share values ​​remained largely stable even during the pandemic.

This year there is a new variant of the fight. However, there are new COVID-19 treatments on the market that can help offset some of the damage they can potentially cause.

A person at a laptop with their hand over their mouth.

Image source: Getty Images.

Either way, we don’t know how the breakout will affect the economy or the stock market. And while there is no reason to specifically expect a stock market crash, it is still important to prepare for it.

In most cases, that means doing a few important things. First, set your emergency fund. That way, if stock prices are falling while your investments are falling, you won’t have to raid your portfolio.

Next, make sure that your portfolio is well diversified. A good mix of assets could help you weather a crash better.

Finally, when you are done with emergency saving, hoard some cash in your brokerage account so you can take advantage of buying opportunities when stock values ​​actually go down. Market crashes are often viewed as a negative event, but in fact, they can be a good time to invest more.

2. Overloading on crypto

Whether or not you are still into cryptocurrency, you may be eager to get into it this year. But before you do that, keep in mind that crypto is still a pretty speculative investment. Digital currencies have only been around for a little over a decade, and it is still unclear whether or not they will make a viable long-term investment.

This is not to say that you shouldn’t put any money into cryptocurrency. But should you do so at the expense of the ability to add high quality stocks to your portfolio? Probably not. A better bet is to invest a smaller portion of your available money in crypto but not do too much with digital coins.

3. Surrender to real estate

You might assume that real estate is a poor investment choice because you have no desire to own and maintain real estate – and face the risks associated with it, such as repairs. But actually, branching into real estate can be a great way to add some variety to your portfolio. And you can do this without having any physical properties.

REITs, or real estate investment trusts, are companies that own and operate a variety of properties, be it shopping malls, warehouses or data centers. Like stocks, many REITs are publicly traded on major stock exchanges, making it easy to keep track of their stock prices.

REITs are largely a safer investment than owning physical real estate because they offer more liquidity. You can sell a REIT faster than you can complete a home sale. And since REITs tend to pay higher dividends than most stocks, they’re also a great way to secure a steady stream of income that you can use or reinvest.

Make it a good year

If your goal is to succeed as an investor in 2022, it pays to prepare for a stock market crash, be careful with crypto, and consider getting into real estate. These decisions could mean the difference between a successful and a disappointing year.