The five mistakes that could doom your financial

Article by: Nipapun Poonsateansup CFP®   Independent Finance Planner

In every trip, it is not always smooth or free of obstacles Sometimes it's disappointing or sometimes it's happy. These all will be the tests that come to us and we have to learn and step through. Same as in financial planning, we will have challenges and tests, before we can reach the financial success. This article will cover 5 mistakes that make you fail financially. When we know what are the mistakes that can happen. We then can prepare and plan to prevent such mistakes.

1. Jump to be the investor before you have a clear goal and investment plan

This mistake is one of the top mistake. And it is a very dangerous for novice investors. If you do not know where you stand today and where you want to go in the future. If you have no goals and good investment plans. Your investment is going to be a vignette. The goal you want is an indication of who you want to be. What do you want to do in the future? While good plans are the tools that will lead you to that goal.

So do not waste your time managing your personal finances. Analyze yourself and set up investment goals. Write down your goals clearly. Then you will be able to choose the smartest investment that can meet your life goals.

2. Not paying attention to inflation or the fear of inflation is too low

What is inflation? Inflation is the state of things increasingly expensive. In other words, the state of the money down. The meaning of the money down is 100 baht in the next 10 years will not be able to buy things cost100 baht to today. If you cannot imagine the horrors of inflation. Let's take a more concrete example of this through one indicator, which we call the noodle index. Let's imagine that 20 years ago, we bought noodles to eat a bowl of 15 baht or 20 baht, then the price of noodles 10 years ago was around 30 baht. Today how much do you pay for a bowl of noodles? How much do you think the next 10 years, 20 years, just how much a bowl of noodle will cost? Here are just a sample of 1 noodle bowl, not to mention the price of various utensils. Needed in our daily life.

So the 100 baht money in the future may not buy even a bowl of noodles and the millions of money you have or are going to, it may not be enough for retirement. So whether it is a retirement fund or a child education fund you have prepared or are about to prepare. Have you ever thought about the effect of inflation? Do not overestimate the fear of inflation. Good luck! Because inflation is really scary. 

3. Delay saving for retirement

Many people think that retirement planning is for people that almost retire. Most people who are still young or some of the early stages of middle age are often neglected. Procrastination in retirement planning and think that is not necessary and not urgent. So it is often that people used money for short-term goals such as tourism or owning a private asset with a price such as having a home and having a car. Most savings are spent on home loans and car loans.
Of course, it comes with interest expenses, then the result is no savings or have not enough money to spend on retirement. And in the end, it was a difficult life after the retirement, a burden of descendants or a burden of society. Hope this is not the end of life you want. If you can choose, after working hard for whole life. Would you like to have a comfortable retirement life? No one is planning to fail but it failed because it was not planned separately. So remember to save money for the future for yourself in the day ahead is really important.

4. Invest without a diversification strategy

Don’t put all your eggs in one basket” "It's one of the primary investment principles you've probably heard. This principle tell you what to consider in investing. That is, risk must be diversified. Egg is our investment and spread the risk by placing eggs in multiple baskets. It is like an investing, spread over many forms of investment such as debt securities, deposits, because of unexpected events with one basket at least, we still have the remaining basket as the same investment. Although some investments, such as stocks during periods of market and economic growth, tend to outperform other types of investments. But we should not take all the money to invest in stocks, because unexpected events with stocks, whether it is from the stock itself or the market and the economy is shifting can happen anytime. So if the unexpected effects will be relaxed and we will not be too miserable.

5. Give up investment

If you are one of those who have been fail about investing or feel that investing is too difficult and it  make you do not want to invest anymore. The advice is to ask yourself, turn back and analyze yourself. Why are you so wrong, for example you were losing from investing in stocks. The question you should ask yourself is, why you chose investing in this stock?  Did you analyze it well before you invested? Have you set up an investment plan and have an investment plan? Did you follow the investment plan? Or you just jumped into this stock because other people bought it and you did not want to miss this train. If you open your mind and analyze the mistakes of your investment seriously, then even if you lose money. But believe that you will have something to handle it with. Something that will become a skill. It's an experience that will make you do better in your investment.

Do not be afraid of failure but learn from it. In addition, the most terrible mistake or failure is that you are too afraid and will not want be an investor.