You have been investing for a while and prices move along quietly. But then suddenly, because of events in the world, politics or the economy, share prices drop sharply (‘correction’). You panic and think: “There goes my money. Selling quickly might be best.” If something is structurally wrong with a company you invest in, this can be a well‑considered investment decision. Companies can go bankrupt, and as an investor you often lose your money.
But if all share prices suddenly fall, it may be wiser to try to control your emotions. Remember that strong price movements are part of investing. Staying calm can sometimes be the better option. People who dare more even choose to buy extra investments in these situations. It depends on what you feel comfortable with and whether your finances allow you to invest more.
Our tip: experience shows that many prices recover sooner or later. So do not be impatient and maybe stop checking prices for a while if seeing ‘another day in the red’ gives you an unpleasant feeling.
"}},{"title":"2. Trying to find the perfect moment to start","richBody":{"value":"You often read it in articles about investing: you cannot know the perfect moment to start. And that is true. Nobody has a crystal ball and there is no signal when the lowest price has been reached. An ‘all-time high’ (highest price) of a share also does not mean you should not buy it; a new phase may have started in which the price keeps rising. In short, there is nothing you can hold on to that tells you for sure what an ideal moment to start is.
Our tip: invest according to a personal plan and, if you want, start in steps at different moments. First decide your investment horizon (the period you want to invest) and the risk you want to take. Information from, for example, our experts at the ING Investment Office can also help you with your investment decisions.
"}},{"title":"3. Investing in products you do not know much about","richBody":{"value":"Imagine you have been investing in mutual funds and shares for a while and you think it is time for a next step: you want to invest in options, because you have heard that they can give a good return. Of course, you can simply buy an option and see what happens.
But are you then consciously dealing with what you are doing? Do you know what you have actually bought? How the product works and what the risks and costs are? These are questions you must ask yourself before you buy this type of investment. The types of investments differ a lot from each other in risk, return and the amount of knowledge you need.
Our tip: ask yourself the right questions, learn about the features and risks, and make sure you understand the product. This reduces the chance of unpleasant surprises and can make investing in new products very interesting.
"}},{"title":"4. Not spreading your investments enough","richBody":{"value":"A common mistake made by investors is that they do not spread their investments enough, which means they take on a lot of risk. We advise you to spread your investments across:
1. Investment categories
One investment category carries more risks than another. So do not put all your money into shares, but also choose, for example, bonds, which can react differently when things change in the world.
2. Sectors or companies
If you choose a specific business sector, your investments are more vulnerable. For example, if you put all your money into shares or bonds of companies in the oil sector, you take on a lot of risk if something negative happens in this sector. By investing in several sectors at the same time, you spread the risks.
3. Regions
If you invest in only one country or region, your level of diversification is lower than when you invest worldwide. It is becoming easier to invest across the world. We advise you to do this as well, so that the impact of an event in a specific region does not affect your investments too much.
Our tip: spread your investments in as many ways as possible.
"}},{"title":"5. Too much trading","richBody":{"value":"Sometimes investors feel restless and feel the need to keep doing something. The choice is of course yours, but be aware that you pay transaction costs for most actions. These costs affect your return. If you trade with relatively small amounts, these costs can even take up a relatively large part of your return.
Our tip: be aware of how many transactions you make and the costs involved.
"}},{"title":"6. Investing with money you have borrowed or cannot afford to lose","richBody":{"value":"We believe that investing should be for the long term. If you invest in this way, you usually have time to wait for your return to recover when prices fall. Sometimes your investment needs to stay invested for many years. Can you afford such a long period? Do you then have enough savings, for example if your washing machine breaks?
We also advise you not to invest – for example for your children’s studies – if you will need the money in three years. If prices fall sharply during that period, you may not have enough time for the markets to recover. Finally: investing with borrowed money can lead to very unpleasant situations if prices fall. You then not only have no return, but you are also left with a debt.
Our tip: make a buffer calculation via NIBUD and determine which extra expenses you expect in the next five years. You can then invest with the money you have left.
"}}]},{"componentType":"paragraph","title":"Good to know","richBody":{"value":"Investing comes with risks and costs. You can lose (part of) your investment. Read more about the risks of investing and how you can reduce them.
*This translation is intended for the customer’s convenience only. In the event of any inconsistency between the English translation and the original Dutch version, the original Dutch version shall prevail.